Refinance Really?
Every week I hear the same question.
“Should I refinance?”
My first response is always:
“Why?”
Too many people refinance simply because another lender is offering a lower interest rate.
A lower rate is nice.
But it’s not always a better financial outcome
After 25 years in banking, I’ve seen borrowers refinance only to:
“Should I refinance?”
My first response is always:
“Why?”
Too many people refinance simply because another lender is offering a lower interest rate.
A lower rate is nice.
But it’s not always a better financial outcome
After 25 years in banking, I’ve seen borrowers refinance only to:
- Reset their loan back to a 30-year term.
- Increase their debt by rolling in a new car, holiday or cash out.
- End up paying more interest over the life of the loan despite a lower rate.
Refinancing should solve a problem not create a new one.
A refinance might make sense if you're:
- Reducing your repayments without extending your debt unnecessarily
- Accessing a loan product that better suits your needs.
- Consolidating high-interest debt with a disciplined repayment plan.
But if your only reason is, “The rate is 0.20% lower,” stop and do the maths.
Sometimes the cheapest loan isn’t the best loan.
The right question isn’t:
“Can I get a lower rate?”
It’s:
“Will refinancing leave me financially better off in five years?”
That’s a very different conversation.
Sometimes the cheapest loan isn’t the best loan.
The right question isn’t:
“Can I get a lower rate?”
It’s:
“Will refinancing leave me financially better off in five years?”
That’s a very different conversation.
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