25/05/2026
“I want cheaper home loan repayments, but I don’t want to reset it to 30 years”
Here’s how to think about your loan term when refinancing — because this is something many people overlook.
For owner-occupiers (home owners)
My general preference is to keep your loan term aligned with where your current loan is at — unless higher interest rates are putting pressure on your cash flow.
Example:
If you originally took out a 30-year loan 5 years ago, ideally your refinanced loan should be around 25 years remaining — not reset back to 30 years.
Why?
Resetting to 30 years may reduce repayments now, but you could end up paying significantly more interest over the long term.
A lower repayment doesn’t always mean a better financial outcome.
For investors
The strategy can be different.
Some investors choose to reset the loan back to 30 years to improve monthly cash flow and free up surplus income.
That extra cash flow can then be directed toward paying down non-deductible debt faster — such as your home loan.
Some investors take this a step further by using interest-only repayments for a period of time to maximise cash flow and flexibility.
Used correctly, this can be a powerful structuring strategy.
But it’s important to understand:
• interest-only loans are usually more expensive,
• they don’t reduce the principal during the IO period,
• and the long-term strategy matters more than simply lowering repayments.
Before refinancing, it’s important to look at:
• repayment savings,
• total interest paid,
• cash flow,
• tax implications,
• and your long-term goals.
Sometimes the “cheapest repayment” is not actually the best
structure.
