Wondering if refinancing will extend your mortgage? Learn how refinancing impacts your loan term, costs, and repayments—plus tips to make the right choice.
Will Refinancing Impact My Loan Term?
When you refinance your home loan, one of the first questions that comes up is: what happens to my loan term? Will it reset? Will I end up paying more interest in the long run? The answer depends on how you structure your refinance—and it’s an important factor to get right.
Here we’ll break down how refinancing can affect your loan term, the pros and cons of different options, and why expert advice from an experienced mortgage broker makes all the difference.
What Happens to Your Loan Term When You Refinance?
When you refinance, you’re effectively replacing your existing mortgage with a brand new loan. That means you’ll usually have two choices:
- Start a new full term (e.g. 30 years):
Many lenders set up your refinance as if it were a new mortgage. That means your 25 years remaining could reset to a new 30-year term. Your repayments may look cheaper, but you’ll be spreading them over a longer period – potentially paying more interest overall. - Match your remaining term:
Alternatively, you can choose to keep the same remaining term. For example, if you have 22 years left, you refinance into a 22-year loan. This means your repayments might not drop as much, but you’ll stay on track to pay off your loan faster.
Pros and Cons of Resetting Your Loan Term
Resetting the term to 30 years can be helpful if:
- You need lower monthly repayments to free up cash flow.
- You’re consolidating debts and want everything rolled into one manageable repayment.
- You’d like to use the savings to invest elsewhere.
But it can have downsides too:
- You’ll likely pay more interest in the long run.
- Your home loan could extend well beyond your original payoff date.
Can You Choose Your Loan Term When Refinancing?
Yes – you don’t always have to accept a default 30-year reset. A mortgage broker can help negotiate terms that suit you, whether that’s matching your existing term, choosing a shorter term to pay off faster, or restructuring repayments to meet your financial goals.
The Role of Costs in Refinancing
Along with the term, you’ll also need to consider the costs of refinancing. These may include:
- Discharge fees from your current lender
- Application or settlement fees on the new loan
- Valuation costs
- Break costs if you’re exiting a fixed-rate loan early
Balancing the upfront costs against the long-term savings is crucial.
Why Work With a Mortgage Broker?
Refinancing isn’t just about chasing a lower rate. The loan term, structure, and features you choose can make a huge difference to your financial future. A mortgage broker will:
- Compare multiple loan options to see which terms work best for you.
- Run the numbers to show the impact of resetting vs. keeping your current term.
- Ensure the costs of refinancing don’t outweigh the benefits.
- Guide you through the paperwork and negotiations.
So, will refinancing impact your loan term? Yes—but how it impacts you depends on the choices you make. Resetting your loan to a new full term may lower repayments but cost more interest over time, while keeping your existing term keeps you on track to pay off your loan faster.
With the right advice, you can structure your refinance in a way that balances savings, flexibility, and your long-term financial goals.
Thinking about refinancing? Our team can review your loan, run the numbers, and help you choose the option that’s right for you.
You can also go and check out our dedicated refinancing page that answers a lot of our frequently asked refinancing questions.
Disclaimer: The information provided on this blog is for general informational purposes only and does not constitute financial or professional advice. While we strive to provide accurate and up-to-date information, mortgage laws and regulations can change, and individual circumstances may vary. We recommend consulting with a qualified financial advisor or mortgage broker to assess your specific situation and needs. Base Home Loans is not responsible for any actions taken based on the content of this blog. Always conduct your own research and consider seeking professional advice before making financial decisions.
