What empty nesters need to know about refinancing

Rates and fees last updated on

When your kids move out of home, it’s a good time to re-evaluate your finances and plan for your twilight years

Refinancing for empty nestersAs an empty nester, you face the bittersweet time when your grown kids have moved out and you now need to rethink your lifestyle. At this stage in your life, it’s a good idea to review your home loan and your financial well-being to ensure that your mortgage is meeting your needs and you can set yourself up comfortably for retirement.

Trading in a high-interest home loan for a lower rate can generate substantial monthly savings that can be cashed into a retirement account. Refinancing is not only an opportunity to lower your monthly repayments, it also provides an avenue to build equity or access equity in your home. Switching to a new lender may also enable you to upgrade or reconfigure your family home so it better suits your lifestyle.

However, make sure you speak with a financial adviser before making a move.

What you need to consider

  • Finance options. If you’re preparing for retirement, you may want to opt for a home loan with lower rates and fees or a loan that allows you to access equity. As a result, you may want to opt for a “no frills” home loan or a line of credit or home equity loan. Fixed rate loans may also be ideal because it will be easier for you to plan for your future knowing your repayments will remain unchanged throughout the life of the loan.
  • Length of time until retirement. The number of years you have until you plan to retire will have a big impact on whether or not it makes sense to refinance. For instance, if you have another 10-15 years until retirement, you may want to shorten your term and lower your repayments before you leave the workforce. However, if you’re planning to retire within 5-10 years, keep in mind that a lower interest rate does not always justify the decision to refinance. Refinancing may extend your loan term, which means you’ll be paying interest for a longer period of time.
  • Debt management. You need to understand whether or not you will retire with debt. If you are refinancing to a 30-year mortgage and intend to retire in 15 years, you need to think about how you will service the loan for the 15 years in which you are not receiving an income.

How empty nesters can go about refinancing

  • Assess your needs. As an empty nester, you’ve probably moved beyond the most expensive stage of your life – you’ve paid off your kids’ school fees, you’ve got a steady super balance and you’ve built up considerable equity in your home. You need to carefully consider your lifestyle and budget needs. Can you afford to hold on to your family home? Should you consider downsizing? Or do you want to expand your property portfolio?
  • Get your finances in order. If your kids have vacated the family home, now is an ideal time to speak with a financial planner about how you can build wealth for the future. Refinancing is a viable option for many empty nesters, but you should also think about how you can leverage your super savings as an effective retirement tax strategy.
  • Chat to your lender. Most borrowers don’t realise that they can negotiate their interest rate with their existing lender. Simply make the phone call to your bank, as they may be willing to negotiate a more competitive rate. The home loan market is competitive and saturated, and most banks are willing to negotiate to retain your business. However, if it’s a different loan type or features that you’re after, then it may be time to switch.
  • Calculate refinancing cost. It’s important to carefully estimate the switching cost. You may need to pay a discharge fee, which could range from $150 - $350 as well as government charges to exit your current mortgage. If you have a fixed rate, you’ll need to pay a break cost. With your new loan, you’ll need to pay upfront costs such as application fees or legal fees charged by the new lender. You can use our switching cost calculator to get an estimate of your total refinancing costs. Remember to consult your trusted accountant or financial planner to help you through this stage.
  • Compare home loans. Speak with a mortgage broker to discuss the type of loan that will best match your borrowing needs. Maybe you need to take out a line of equity loan to fund a renovation or travel plans, or perhaps you need a loan with no ongoing account-keeping fees. A mortgage broker has access to a panel of lenders to help you find a good deal and even negotiate the mortgage terms on your behalf.

Refinancing as an empty nester planning

Compare line of credit home loans

Rates last updated August 16th, 2017
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier Special Rate, P&I)
Owner-occupiers can lock in a competitive rate with no ongoing fees. Conditions apply.
3.74% 4.85% $0 $0 p.a. 95% Go to site More info
loans.com.au Essentials - Variable (Owner Occupier, P&I)
A basic home loan with a competitive rate and low fees.
3.64% 3.66% $0 $0 p.a. 80% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.49% 4.47% $0 $375 p.a. 85% Go to site More info
UBank UHomeLoan Variable Rate - Standard Variable Rate Value Offer (Owner Occupier P&I)
Combine a low variable interest rate and free redraw with no application or ongoing fees.
3.74% 3.74% $0 $0 p.a. 80% Go to site More info
Reduce Home Loans Rate Buster 100% Offset Variable Home Loan - Up to $750k (LVR <=80%)
Borrow up to 80% LVR with no ongoing fees and a 100% offset account.
3.54% 3.54% $440 $0 p.a. 80% Enquire now More info
loans.com.au Offset Variable - Up to 80% LVR (Owner Occupier P&I)
Take advantage of a 100% offset account along with no annual or application fees.
3.72% 3.74% $0 $0 p.a. 80% Go to site More info
Bank Australia Basic Home Loan - Variable (Owner Occupier)
A competitive variable rate that allows borrowers to borrow a minimum of $100,000 with a $0 ongoing fee.
3.86% 3.87% $0 $0 p.a. 80% Go to site More info
IMB Budget Home Loan - LVR <=90% (Owner Occupier)
Get a competitive rate without features you may not use.
3.97% 4.02% $445 $0 p.a. 90% Go to site More info
HSBC Home Value Loan - Resident Owner Occupier only
Enjoy a low variable rate with no ongoing fees and borrow up to 90% of the value of the property.
3.85% 3.86% $0 $0 p.a. 90% Go to site More info
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I) First Home Buyer Special
A special rate for first home buyers buying residential property and borrowing over $150K. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.69% 4.86% $0 $395 p.a. 90% Go to site More info
Tic:Toc Live in Loan Variable Rate
A competitive variable rate product with low fees offered by a 100% online lender.
3.68% 3.69% $0 $0 p.a. 80% Go to site More info
St.George Basic Home Loan - Promotional Rate (Owner Occupier, P&I)
A no frills loan with a competitive rate and a maximum LVR of 95%.
3.80% 3.81% $0 $0 p.a. 95% Enquire now More info
ING Orange Advantage Loan - $500,000+ (LVR <=80% Owner Occupier, P&I)
A loan with no application fee and borrow up to 95% LVR.
3.74% 4.06% $0 $299 p.a. 95% Go to site More info
IMB Budget Home Loan - Special LVR <=80% (Owner Occupier and Principal & Interest only)
A special limited time offer for owner occupiers. An IMB Transaction Account must be opened with this loan.
3.79% 3.84% $445 $0 p.a. 80% Go to site More info
ING Orange Advantage Loan - $150,000 to $500,000 (LVR <=80% Owner Occupier, P&I)
A fully featured home loan with an offset account and discounts available. $1000 cashback offer available for loans over $300k. Terms and conditions apply.
3.79% 4.11% $0 $299 p.a. 80% Go to site More info
Greater Bank Great Rate Discount Variable with Family Pledge Home Loan - Up to 110% LVR
Discounted rate available with family pledge loans. Family pledge loans require no LMI and no deposit. NSW, Qld and ACT only.
3.99% 3.99% $0 $0 p.a. 110% Go to site More info
Bank Australia Basic Home Loan - Special LVR <70% (Owner Occupier)
A special variable rate home loan with no application or ongoing fees.
3.74% 3.75% $0 $0 p.a. 70% Go to site More info
3.79% 4.07% $500 $0 p.a. 95% Go to site More info
Heritage Bank Discount Variable Home Loan - Special Rate Offer (Owner Occupier) New Customers Only
A great interest rate home loan offer with unlimited redraw and unlimited extra payments.
3.99% 4.04% $600 $0 p.a. 90% Go to site More info
3.78% 3.79% $600 $0 p.a. 90% Enquire now More info
Macquarie Bank Basic Home Loan - LVR ≤ 80% ($750,000+ Owner Occupier, P&I)
Minimum loan amount for this basic home loan is $750001.
3.84% 3.84% $0 $0 p.a. 80% Enquire now More info
3.91% 4.42% $0 $0 p.a. 95% Enquire now More info
ME Flexible Home Loan Fixed - 2 Year Fixed Rate (Owner Occupier, P&I)
No application or ongoing fees and a competitive 2 year fixed rate.
3.74% 4.81% $0 $0 p.a. 95% Go to site More info
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I)
A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.88% 4.89% $0 $395 p.a. 95% Go to site More info
ClickLoans The Online Home Loan - Owner Occupier ≤ 80% LVR, P&I
Enjoy a competitive variable interest rate, no application fee, limited annual fees and an offset account with redraws.
3.69% 3.69% $0 $0 p.a. 80% Go to site More info
AMP Essential Home Loan  -  $100,000 and above (Owner Occupier)
Take advantage of a redraw facility, competitive variable rate and no application or settlement fees for a limited time.
3.96% 3.98% $0 $0 p.a. 90% Go to site More info
Community First Fixed Home Loan - 3 Years Fixed Owner Occupier special offer (New Loans only)
A limited time fixed rate special with no monthly or annual fees plus a 100% offset account.
3.89% 4.97% $600 $0 p.a. 95% Go to site More info
Bankwest Equaliser Home Loan - LVR ≤80% (Owner Occupier, P&I & $200k+) new customers only
Enjoy a variable 3 year introductory rate with the Bankwest Equaliser Home Loan.
3.72% 4.19% $0 $0 p.a. 80% Go to site More info
Finsure Home Loan Deal
Enjoy a low variable rate with no application fee.
3.69% 4.03% $0 $299 p.a. 80% Enquire now More info
Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier, P&I)
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.74% 4.12% $0 $395 p.a. 80% Go to site More info
P&N Bank & Home Loan & Bag
A flexible low-rate variable home loan that lets you combine your loan with other financial products.
3.99% 4.02% $395 $0 p.a. 80% Go to site More info
Select Encompass Credit Union Special Offer 2 Year Fixed Rate Home Loan
A fixed rate loan with limited fees and a competitive interest rate.
3.74% 4.15% $0 $0 p.a. 95% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 2 Year Fixed LVR ≤85% ($150K+ Owner Occupier)
Discount off an already competitive 2 year fixed rate for loans over $150k. NSW,QLD and ACT residents only.
3.69% 4.45% $0 $375 p.a. 85% Go to site More info
Connective Smart Options Basic Home Loan - LVR ≤ 70% (Owner Occupier, P&I)
A variable home loan with $0 annual or monthly fees.
3.74% 3.74% $363 $0 p.a. 70% Enquire now More info
Beyond Bank Low Rate Special Home Loan - LVR <70%
A special low variable rate for owner occupiers with 100% offset account and no application or ongoing fees.
3.83% 3.83% $0 $0 p.a. 70% Go to site More info
Australian Unity Kick Starter Home Loan
A maximum 80% LVR home loan with no ongoing service fees and a linked transaction account.
3.79% 3.82% $600 $0 p.a. 80% Go to site More info
QT Mutual Bank Mortgage Saver Home Loan
A low rate home loan with no application or ongoing fees. Note that to be eligible for this loan you must be QLD resident.
3.95% 3.95% $0 $0 p.a. 95% Go to site More info
loans.com.au Essentials - Smart Loan Package P&I
Package your owner-occupied loan with your investment loan and enjoy low rates for both.
3.89% 3.91% $0 $0 p.a. 80% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 3 Year Fixed (Owner Occupier Special Rate, P&I)
A limited time fixed rate home loan with extra repayment abilities. Conditions apply.
3.79% 4.75% $0 $0 p.a. 95% Go to site More info
Australian Unity Health, Wealth and Happiness Package - (Owner Occupier, P&I)
Take advantage of a 0.60% discount on your rate, a 100% offset account and no ongoing fees.
3.99% 4.02% $600 $0 p.a. 90% Go to site More info
Greater Bank Great Rate Home Loan - Discounted Variable ($150K+ Owner Occupier)
A competitive variable rate with a redraw facility. NSW, QLD and ACT residents only.
3.99% 3.99% $0 $0 p.a. 85% Go to site More info
ME Basic Home Loan - LVR <=80% (Owner Occupier, P&I)
A low variable rate loan with no application or ongoing fees.
4.09% 4.11% $0 $0 p.a. 80% Go to site More info
NAB Base Variable Rate Home Loan - Owner Occupier (P&I)
A competitive no frills home loan. 350K NAB Rewards Points offer available. Terms and conditions apply.
4.17% 4.21% $600 $0 p.a. 95% Go to site More info
IMB Essential Home Loan - LVR <=90% (Owner Occupier)
100% offset account, unrestricted additional repayments and no monthly account keeping fees
4.19% 4.19% $0 $0 p.a. 90% Go to site More info
ME Flexible Home Loan Fixed - 3 Year Fixed Rate (Owner Occupier, P&I)
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
3.99% 4.77% $0 $0 p.a. 95% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Years Fixed (Standard Rate, P&I)
Enjoy a low interest rate and borrow up to 95% (with LMI) of your property's value.
3.94% 4.88% $0 $0 p.a. 95% Go to site More info
ANZ Simplicity PLUS Home Loan - Special Offer (Owner Occupier, P&I)
Enjoy a basic home loan with a high LVR and no application or ongoing fees.
4.03% 4.07% $0 $0 p.a. 95% Enquire now More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 1 Year Fixed (Standard Rate, P&I)
Investors can take advantage of a short term fixed rate with no application or ongoing fees.
3.94% 4.98% $0 $0 p.a. 95% Go to site More info
Bank of Queensland Fixed Rate Home Loan - 3 Year Fixed Rate (Owner Occupier, P&I)
Lock in a fixed interest rate term for repayment certainty.
4.39% 5.42% $300 $10 monthly ($120 p.a.) 95% Enquire now More info
Commonwealth Bank Wealth Package Fixed Home Loan - 2 Year Fixed (Owner Occupier) P&I
A package home loan with fee free extra repayments available during the fixed term.
3.99% 4.99% $0 $395 p.a. 95% Enquire now More info
St.George Fixed Rate Advantage Package -  2 Year Fixed Rate (Owner Occupier, P&I)
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,500 cashback available for refinancers. Conditions apply.
3.99% 4.98% $0 $395 p.a. 95% Enquire now More info
Westpac Fixed Options Home Loan Premier Advantage Package - 2 Years, P&I
Lock in a discounted fixed rate with a low service fee.
3.99% 4.90% $0 $395 p.a. 95% Enquire now More info
Virgin Reward Me Variable Home Loan - LVR <= 80% ($750k+ Owner Occupier, P&I)
Earn Velocity points on a competitive variable rate home loan with flexible features.
3.79% 3.92% $0 $10 monthly ($120 p.a.) 80% Enquire now More info

Refinance or downsize?Refinancing as an empty nesters moving out

Many empty nesters are faced with the decision to either refinance their home loan or downsize if their home no longer meets their needs. When weighing up the financial viability of both options, you need to evaluate the costs of refinancing and compare this to the cost of selling your home and moving into a smaller place.

If you decide to refinance, you’ll need to calculate your switching costs to see if refinancing makes financial sense. This will include any discharge fees you need to pay to your existing lender, any government charges as well as any upfront application fees charged by your new lender.

If downsizing seems like the best situation for you, then you’ll need to forecast the cost of selling your home and then buying another property. When selling the property, you’ll need to set aside funds for an agent’s commission, advertising costs, the lender’s discharge fees and removalist costs. Use our property selling calculator to get an idea of the costs involved.

Speak to local real estate agents to see what similar properties are worth in your area, and consider value-adding activities such as minor upgrades or renovations that may help you achieve a higher sale price.

Next, you’ll need to consider whether your house is sellable and whether or not now is the right time to put it on the market. Factor in the time and money required to sell your home and move into a new property such as stamp duty (if applicable), conveyancing fees, inspections, the lender’s upfront fees and lenders mortgage insurance (LMI).

Becoming an empty nester can bring about mixed emotions, but make sure you think about the quality of retirement you’d like to have and plan accordingly. (Fingers crossed your kids won’t be “boomerangs”!).


Images: ShutterStock

Belinda Punshon

Belinda is a journalist here at finder.com.au. Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

Was this content helpful to you? No  Yes

Related Posts

Bank Australia Basic Home Loan - Variable (Owner Occupier)

A competitive variable rate that allows borrowers to borrow a minimum of $100,000 with a $0 ongoing fee.

NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I)

A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)

Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.

IMB Budget Home Loan - LVR <=90% (Owner Occupier)

Get a competitive rate without features you may not use.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question
feedback