Does Refinancing Reset Your Home Loan to 30 Years?
If you’ve been paying off your mortgage for a few years and you’re thinking about refinancing, one question might be holding you back.
Will your loan go back to 30 years?
It’s a common concern, and it’s not an unreasonable one. The good news is that refinancing doesn’t automatically restart your mortgage term, unless you let it.
Let’s break this down properly, so you know what to expect and how to keep your loan on track.
What Actually Happens to Your Loan Term When You Refinance
When you refinance, you’re closing your current loan and opening a brand new one.
This means you’re starting fresh with a new contract, which gives you the option to choose a new loan term. Most lenders offer standard terms like 30, 25, 20 or 15 years.
So if you’ve already paid off 5 years of your original 30-year loan, you might want your new loan to run for 25 years to keep your overall timeline the same.
But here’s the catch. If you don’t ask, most lenders will default to a 30-year term.
That doesn’t mean you’re being tricked. It’s just the standard setup. Longer terms mean lower monthly repayments, which most people initially ask for. Still, if your goal is to avoid adding years back onto your loan, you need to speak up.
Why Lenders Default to 30 Years
A 30-year term is the industry standard because it spreads your repayments out, which lowers the monthly amount due.
That can make a loan look more affordable on paper, especially for new borrowers or refinancers with tight cash flow. From the lender’s point of view, it’s about defaulting to a structure that suits the widest group of borrowers.
But here’s what matters. A longer term means you’ll pay more interest in the long run.
That’s why it’s important to understand what’s being offered, and ask for a shorter term if that’s what you want.
How to Avoid “Resetting the Clock” on Your Loan
There are a few ways to manage your new loan term so you don’t undo the progress you’ve already made:
- Match the term to what’s left on your current loan
If you have 23 years left, ask for a 23-year loan. Many lenders can accommodate specific terms, or will offer increments like 25, 20 or 15 years. Choose the closest fit that doesn’t extend your payoff timeline. - Accept a 30-year term but keep your repayments the same
If you do go with a new 30-year term – whether by choice or default – you can still pay it off faster by continuing to pay your original monthly amount. The extra money goes toward the principal and helps you stay on your original timeline. - Round to the nearest shorter term
If your lender only offers options like 25 or 30 years, rounding down will keep you moving forward. A 25-year term may mean slightly higher repayments than a 30-year term, but it will save you significant interest in the long run.
When Starting a New 30-Year Term Can Make Sense
There are times when extending the loan might be the right move.
For example, if you’re reducing from two incomes to one, have other expenses increasing, or just need some financial breathing room, a new 30-year term can help reduce your monthly repayments.
You’re trading off long-term cost for short-term cash flow. And that’s a valid decision—especially if you plan to make extra repayments later or refinance again when your situation improves.
Just go into it with eyes open and a plan in place.
Real Example: How This Plays Out
Let’s say you took out a $500,000 loan five years ago, and now owe $450,000 with 25 years remaining.
If you refinance that $450,000 into a new 30-year loan, your repayments will drop, but you’ll be extending your total loan duration to 35 years. That’s five extra years of interest, which could add tens of thousands of dollars to your total cost.
If instead, you refinance into a 25-year loan, you’ll stay on track and potentially still lower your monthly repayments if the interest rate is better.
That small change, just remembering to request a specific loan term, can make a huge difference over time.
Always Check the Documents
Before you sign anything, review the term in your loan contract. If it says “360 months” and you were expecting something shorter, raise it with your lender or broker before settlement.
Once the loan settles, changing the term usually requires a formal variation or even another refinance.
Bottom Line
Refinancing doesn’t automatically reset your home loan to 30 years. But it can if you’re not paying attention.
If your goal is to pay off your mortgage on time—or sooner—then be proactive. Ask for a loan term that reflects where you’re up to. Or, if you want the flexibility of a 30-year term, keep your repayments at the same level you were making before.
Either way, the choice is yours. With a little planning, you can get the benefit of a better rate while still staying on track to pay off your home sooner.