A fixed rate mortgage often seems like a great idea. This type of home loan will enable you to lock in your interest rate, giving you a clear picture of how much principal and interest you will need to pay over the fixed term of the loan. But what happens when interest rates start to decline?

For holders of a fixed rate home loan, nothing happens. You have already set your interest rate, and this will remain the same across the fixed repayment term. In this case, the only way to access a reduced interest rate will be to refinance the mortgage. We will work with you to evaluate the refinancing costs and interest savings, prior to proceeding with your new loan application.

Even when interest rates are taken out of the equation, you may be able to access reduced repayments when you opt for home refinance. Roughly speaking, your repayments are based upon the remaining principal, plus interest, of the loan, divided by the length of the loan term. Refinancing can help you to access a new, extended loan term, reducing your monthly payments in the process.

While this will leave you paying off your home loan for longer, it may provide you with additional flexibility, thanks to reduced payments. Bear in mind that you will be building up less equity each month with these reduced payments and it is likely to cost more in interest over the full term.

If you are able to pay more than the minimum amount on your home loan, you can withdraw this additional equity to a redraw account. This redraw facility gives you the opportunity to access some of the equity in your home. You can also use an offset account or transaction account to tap into a portion of this resource. To access more of your equity, however, you may need to refinance.

You may be able to begin your loan term again from scratch, paying off the full amount of the purchase value with a renegotiated interest rate and repayment term. This would allow you to access the capital you have already built up as home equity. With the right strategy, this can be a lucrative move, as you will be able to improve your home to increase its resale value or purchase other valuable assets. Our advisors can help you gain a better understanding of your objectives and your financial situation.

It is likely that you have other monthly payments on top of your home loan — a car loan or personal loan, for example, or a credit card debt. It may be simpler and more cost-effective to consolidate this credit into a more manageable payment.

In some cases, you may be able to achieve this via refinancing. We will need to examine your case carefully, factoring in the break costs associated with terminating your existing home loan and examining comparison rates before restructuring your payments. Our advisors can assist you as you weigh up this option.