Should I get financial advice before I refinance?

Refinancing your home loan can seem like a big decision, considering a property is often the most expensive purchase an Australian makes in their lifetime. For this reason, it can seem like a good idea to get as many opinions as possible before deciding whether to refinance a loan.

Professional financial advice can provide guidance in these situations, though it may not always be necessary if you’re refinancing a relatively straightforward owner-occupier or investment loan. But seeking financial advice is a personal choice, and you may feel more confident seeking a professional perspective.

Keep in mind that mortgage brokers aren’t the same as financial advisers. While brokers are obliged to act in the best interest of borrowers, and can help you compare and apply for home loans, they may not be able to offer detailed advice around managing your other bank accounts, loans, and expenses like a professional financial adviser could.

If you have multiple properties with multiple home loans, and you are considering refinancing one or all of these loans, some professional advice could help to make sure you are paying off your debts in the most cost-effective and efficient manner.

If you’ve fallen on hard times and urgently need to reduce your mortgage costs, you may be considering refinancing to a lower rate. If, however, you have already missed a mortgage repayment or are at risk of defaulting on other loans, then you may benefit from contacting a financial adviser to help get your immediate financial situation under control. Refinancing your mortgage may be part of the greater plan, but you may also want to avoid sinking into further financial stress, sooner rather than later.

If the purpose of your property has changed, then your type of home loan will need to change along with it. If this is your first time owning an investment property, you may want to seek professional advice not only on how to switch your loan, but on the potential costs, benefits and tax implications of your new investment.

If you want to refinance your loan, but have little to no equity available in your property (such as if property values have declined in your area, or if your available equity is already being used to access other loans), then it may be harder to organise than your standard home loan switch. You may want to engage a professional adviser to discuss why you want to refinance with no equity, and whether it will be possible in your personal circumstances.

Refinancing your home loan to consolidate existing debt from other loans and credit cards may be able to help you get your finances under control. However, if you’re not careful you could end up paying more interest than is necessary on your consolidated debts. Getting some assistance managing your finances could help you work out an effective plan to get on top of your debt, while saving you time, money and hassles.

While it is up to you whether you feel more comfortable seeking advice before refinancing, switching from your standard home loan to a loan that offers a lower rate or better features is often simple enough that you may be able to navigate the process alone. Taking the time to research the refinancing process and how to find a home loan suited to your needs will help you along the way, but paying for personal advice may not always be necessary.

If you’re unhappy with the level of service offered by your lender and you have a straightforward mortgage, then you may not require personalised advice before refinancing. All that may be required is for you to compare home loans, find another lender, and choose a loan you’re happy with to kickstart the refinancing process.