How to know when to refinance my home loan? That’s a great question, and the answer to that very much depends on your situation. In some cases, it can be incredibly smart to refinance your home. In other cases, it may be the worst mistake you can be making that will hurt your finances.

When You Should I Be Refinancing My Home Loan

1. You Have an Unaffordable Payment

If your monthly mortgage payment is eating up more than 15 per cent of your income, you should definitely consider refinancing your home loan. That’s because you’ll have a chance to get into a new loan and put yourself in a better financial situation. 

2. You Have to Sacrifice Savings for Other Financial Goals

If you’re unable to invest in your retirement or your children’s college fund because you have to put a lot of your hard-earned money toward your home loan each month, you should definitely consider refinancing. Remember, after paying for things like your living expenses, car payments, and more, you may not have much left for your home loan. If that’s the case, consider refinancing to ease your financial burden.

3. You’ve Missed Out on Tax Deductions

If you’ve been refinancing your home loan a lot, you may have missed out on some tax deductions along the way. You’re allowed to take a deduction of some or all of your mortgage interest expenses on your taxes. However, if you miss out on any of those deductions, you can refinance and get them back.

4. You’re Just Plain Upset With Your Current Loan

If you’re just annoyed with your current loan, there’s a chance you can refinance and get a lower interest rate. Sometimes we get so frustrated with a loan that we don’t want to keep it. If so, you may want to look into refinancing.

5. RBA increases cash rates

There has been an indication this year in 2022, that the RBA will increase the base cash rate, to combat the rising inflation concerns. After years of low interest rates, every expert is signalling a tightening of rates.

If you’re on a variable rate, banks and lenders normally pass on the rate rise the next day. Therefore, it might be a good idea to consider your options and look to refinancing to fix your rate or find a better deal for the long run.

When You Should I NOT Be Refinancing My Home Loan

1. You’ve Got a Good Loan

If your mortgage is low-rate and there’s not much chance of changing that, don’t refinance. Why? Because you’ll lose a lot of money upfront.

If you have a good loan, you’re most likely benefiting from a low-interest rate. So, if you refinance, you’ll end up paying more interest in the long run.

2. You Have a Lot of Debt

If you have a lot of debt and your mortgage is only a small part of it, you shouldn’t refinance. Because if you do, you’ll have to pay closing costs, which will eat up more of your savings.

3. You Have a Low Credit Score

If you have a low credit score, you shouldn’t refinance your home loan. The reason? Unless you have access to a much better loan, you will more than likely be unable to find a better solution to refinance into!


Refinancing your home loan is a smart move to make if you do it for the right reasons. If you’re able to get a lower rate and can meet strict credit standards, you should definitely consider it. Otherwise, you may want to hold off. After all, refinancing isn’t for everyone, and unless you can get access to a much better loan with refinancing, you should maintain your current one as it won’t cause any unnecessary hassle for you!

Mortgage Broker Home Loans offers expert help to those looking for the right mortgage to finally buy their dream home. If you are looking for refinancing services in Melbourne, get in touch with us today!