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 December 14th, 2017
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.64%
3.66%
$0
$0 p.a.
80%
A basic home loan with a competitive rate and low fees.
3.62%
3.62%
$0
$0 p.a.
80%
A discounted, competitive variable rate loan with limited fees.
3.64%
3.67%
$0
$0 p.a.
80%
A low rate home loan with no ongoing fees.
3.88%
4.89%
$0
$395 p.a.
95%
A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.64%
3.66%
$0
$0 p.a.
80%
A home loan with a competitive variable rate, limited fees and plenty of flexibility.
3.64%
3.64%
$0
$0 p.a.
70%
A low-rate basic home loan requiring a 30% deposit.
3.69%
4.01%
$0
$299 p.a.
95%
A loan with no application fee and borrow up to 95% LVR.
3.69%
3.69%
$0
$0 p.a.
90%
A special limited time offer for owner occupiers. An IMB Transaction Account must be opened with this loan.
3.74%
3.74%
$0
$0 p.a.
80%
Pay no application fee or ongoing fees with this loan.
3.64%
4.03%
$0
$395 p.a.
80%
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.99%
4.91%
$300
$10 monthly ($120 p.a.)
80%
Special offer for new lending between $150k-$500k & under 80% LVR.
4.09%
4.11%
$0
$0 p.a.
90%
Access a fee-free offset account and a special interest rate for investors.
3.68%
3.69%
$0
$0 p.a.
95%
A no frills loan with a competitive rate and a maximum LVR of 95%.
3.95%
4.99%
$300
$10 p.a.
95%
A flexible, competitive fixed rate loan that allows for extra repayments.
3.78%
3.78%
$0
$0 p.a.
80%
A basic low-rate home loan that still offers some useful features.
3.65%
4.84%
$0
$395 p.a.
90%
A 2 years fixed platinum package that has $0 application and a loan redraw facility.
3.72%
3.74%
$0
$0 p.a.
80%
Take advantage of a 100% offset account along with no annual or application fees.
3.73%
3.73%
$0
$0 p.a.
70%
A special low variable rate for owner occupiers with 100% offset account and no application or ongoing fees.
3.79%
4.11%
$0
$299 p.a.
80%
A fully featured home loan with an offset account and discounts available.
3.99%
4.02%
$600
$0 p.a.
90%
Take advantage of a 0.60% discount on your rate, a 100% offset account and no ongoing fees.
3.58%
3.59%
$0
$0 p.a.
80%
A competitive variable rate product with low fees offered by a 100% online lender.
3.97%
4.02%
$445
$0 p.a.
90%
Get a competitive rate without features you may not use.
3.65%
4.19%
$500
$0 p.a.
95%
Get a discounted fixed interest rate for the first 12 months while you settle into your new loan.
3.74%
4.15%
$0
$395 p.a.
80%
Enjoy a discount of a competitive interest rate and 100% offset account.
3.87%
3.92%
$0
$0 p.a.
90%
A great interest rate home loan offer with unlimited redraw and unlimited extra payments.
3.96%
3.98%
$0
$0 p.a.
90%
Take advantage of a redraw facility, competitive variable rate and no application or settlement fees for a limited time.
3.97%
3.97%
$0
$0 p.a.
90%
A competitive variable rate home loan with no ongoing fees.
3.84%
4.83%
$0
$0 p.a.
95%
Get a competitive 2-year fixed rate with no application or ongoing fees.
3.72%
4.19%
$0
$0 p.a.
80%
Enjoy a variable 3 year introductory rate with the Bankwest Equaliser Home Loan.
4.04%
4.07%
$0
$0 p.a.
80%
Access the equity in your home with a competitive interest-only rate and no application fee.
3.99%
3.99%
$395
$0 p.a.
80%
A flexible low-rate variable home loan that lets you combine your loan with other financial products.
3.74%
3.74%
$0
$0 p.a.
95%
A low rate home loan with no application or ongoing fees. Loan comes with 1 year of free home and contents insurance. Note that to be eligible for this loan you must be QLD resident.
3.89%
3.91%
$0
$0 p.a.
80%
Package your owner-occupied loan with your investment loan and enjoy low rates for both.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate home loan with flexible features. You can earn 30,000 Velocity Points for every $100k you borrow (for a limited time, subject to eligibility requirements).
4.09%
4.11%
$0
$0 p.a.
80%
A low variable rate loan with no application or ongoing fees.
4.19%
4.19%
$0
$0 p.a.
90%
100% offset account, unrestricted additional repayments and no monthly account keeping fees
3.99%
4.77%
$0
$0 p.a.
95%
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
3.94%
4.88%
$0
$0 p.a.
90%
Enjoy a low interest rate and borrow up to 90% (with LMI) of your property's value.
3.69%
3.69%
$0
$0 p.a.
70%
Enjoy a low variable rate with no application and ongoing fees.
3.99%
4.03%
$0
$0 p.a.
95%
Enjoy a basic home loan with a high LVR and no application or ongoing fees.
3.59%
4.42%
$0
$0 p.a.
95%
This competitive introductory rate is a limited time offer for new owner-occupiers
3.68%
3.69%
$600
$0 p.a.
90%
Get a low variable rate along with some important basic features.
3.79%
3.79%
$0
$0 p.a.
80%
Minimum loan amount for this basic home loan is $750001.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
95%
Lock in a fixed interest rate term for repayment certainty.
3.69%
4.03%
$0
$299 p.a.
80%
Enjoy a low variable rate with no application fee.
3.99%
4.99%
$0
$395 p.a.
95%
A package home loan with fee free extra repayments available during the fixed term.
3.85%
4.95%
$0
$395 p.a.
95%
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.
3.88%
4.88%
$0
$395 p.a.
95%
Lock in a discounted fixed rate with a low service fee.
$0
$0 p.a.
A basic low-rate home loan that still offers some useful features.

Compare up to 4 providers

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

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.

IMB Budget Home Loan - LVR <=90% (Owner Occupier, P&I)

Get a competitive rate without features you may not use.

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.

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