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Why do borrowers refinance their loans?

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So there are two key reasons why you might consider refinancing.

The first is that you want to lower the monthly repayment amount, so looking for a lower interest rate can reduce the amount that you're paying monthly.

why do borrowers refinance their loans?

The second reason is if you want to get ahead on your loan and you want to pay off that loan faster, you might keep your repayments the same.

When you get a lower rate, if you kind of make those repayments at the same amount, you can reduce the amount of time you're paying off your loan and therefore reduce that overall interest you're paying over the loan term.

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Tom Watson is a senior journalist at Money magazine, and one of the hosts of the Friends With Money podcast. He's previously worked as a journalist covering everything from property and consumer banking to financial technology. Tom has a Bachelor of Communication (Journalism) from the University of Technology, Sydney.

Rachel Wastell is the media spokesperson for Mozo.com.au. She holds a Bachelor's degree in Media and Communications. With more than a decade of experience in the communications industry, Rachel regularly provides expert commentary and financial news to mainstream media including SBS News, Sunrise, 7News, ABC News, 2GB and more.