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:

• 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.