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Straight Answers · Loan term
Does refinancing put me back to a 30 year loan term?
Bayley Clarke · Mortgage broker on the road · Reviewed 24 August 2026 · 4 min read
The short answer
No, not unless you choose to. When you refinance, you have the opportunity to have another look at how your home loan is set up and decide how you want to go about it moving forward.
A lot of that comes down to what you would like your minimum repayments to look like, as well as how long you would like to have paid off your loan for. If you’ve got a 30 year home loan, you’ve had it for five years and you’ve got 25 years left, we can just put your loan at 25 years so it lines up with your current loan. Some people want the flexibility to pay less than they’re paying now, so they put the loan back to 30 years knowing they can make as many additional repayments as they like. Others have a lot of surplus cash flow and want to make it 20 years with the minimum repayments to reflect that. It doesn’t just go back to 30.
The 80 second version. Everything below is the detail underneath it.
A refinance is a new loan, so the term is a blank field
The reason the question comes up is that the application form for most lenders defaults to 30 years. If nobody changes it, that’s the term you get, and five years of progress on the old loan quietly turns into 35 years of repayments across the two. That isn’t a rule, it’s a default, and defaults can be overwritten.
What you can usually ask for on the new loan:
- Match the remaining term. 25 years left on the old loan, 25 years on the new one. Your minimum repayment lands about where it was and the finish line doesn’t move.
- Shorten it. If your cash flow has grown, set 20 years and let the higher minimum do the discipline for you.
- Reset to 30 and pay it like 25. Take the lower minimum for flexibility, keep paying what you were paying, and the extra goes straight to principal. Most variable loans allow unlimited additional repayments; fixed loans usually cap them.
The third option is the one most people land on, and it’s fine as long as the extra repayments actually happen. The risk isn’t the 30 year term. The risk is paying the new minimum for a year without noticing.
What the term actually changes
Here is Bayley’s example from the video with numbers on it. $500,000 owing, 25 years left on the old loan, refinanced either to 25 years or back to 30. The rows are a spread of rates so you can see the gap holds whatever the market is doing; none of them is a rate anyone is offering you.
| $500,000 owing, minimum monthly repayment | Term matched at 25 years | Term reset to 30 years | Lower by |
|---|---|---|---|
| 5.0% p.a. | $2,920 | $2,680 | $240 a month |
| 5.5% p.a. | $3,070 | $2,840 | $230 a month |
| 6.0% p.a. | $3,220 | $3,000 | $220 a month |
| 6.5% p.a. | $3,380 | $3,160 | $220 a month |
| 7.0% p.a. | $3,530 | $3,330 | $200 a month |
| Reset to 30, but keep paying the 25 year amount | Loan gone in 25 years at any rate in the table. The 30 year term costs nothing you didn’t choose to spend. | ||
Illustrative numbers, not a quote. The gap in the minimum sits around $200 to $250 a month across the whole spread, and every dollar of that gap, paid over five extra years, is interest. The longer term is not what costs money, paying the longer term’s minimum is. Set the repayment, not the term, and the term takes care of itself.
The reason a broker sometimes asks for 30 years anyway
When a lender assesses whether you can afford the new loan, it works out the repayment over the term applied for, at a rate higher than the one you will pay. A longer term makes that assessed repayment smaller, and on a borderline application that difference can be what gets the refinance approved. So you may see 30 years on the paperwork for a reason that has nothing to do with how long you intend to take.
That’s a servicing decision, not a life decision. You can still repay the loan as if it were 20 years from the first month. What you can’t easily do is go the other way: shortening the term after settlement is usually a variation request, and some lenders will reassess you to do it. Which is why the conversation about term happens before the application goes in, not after.
Four things that catch people out
- The old loan’s progress doesn’t carry across on its own. Five years paid on one loan plus 30 years on the next is 35 years of repayments unless the new term is set deliberately. The application form won’t remind you.
- A shorter term raises the minimum, and the minimum is what the lender holds you to. If your income is variable, a 30 year term with extra repayments gives you the same outcome with a fallback. A 20 year term gives you no fallback.
- Fixed rates limit the “reset and overpay” plan. Most fixed loans cap additional repayments for the fixed period. If you fix and also reset to 30, check the cap before assuming you can pay it like 25.
- Term and rate get decided together. A refinance that saves on rate but quietly adds five years of minimums can cost more than it saves. Ask for both numbers side by side before you sign.
What to bring, and what to ask
Your most recent home loan statement shows the balance, the remaining term and your current minimum. From that I can show you the new minimum at a matched term, a shorter one and a reset to 30, and what each one costs over the life of the loan, so the term on the application is a choice rather than a default.
This page describes how loan terms generally work on a refinance as at August 2026. Individual lenders aren’t named on purpose: product rules move, and the right term depends entirely on your situation rather than on a list in an article. The numbers on this page are arithmetic across a spread of example rates, not an offer, and any rate you are actually offered will be different.
Refinancing and not sure what term to ask for?
Send me your latest statement and I’ll run your balance at a matched term, a shorter one and a full 30 years, side by side, so you can see the minimum and the total cost of each before anything is lodged. No application, no credit check.
No application, no credit check, nothing on your file. Just the numbers.
Next question
What does refinancing actually cost?Term is one half of the refinance maths. The other half is what it costs to move, and whether the saving clears it.
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