Buying property is one of the biggest purchases you will ever make, and over time your circumstances may change, meaning your current mortgage isn't the best fit for your individual situation.

Refinancing is an option explored by many mortgage holders, whether it be to get access to a better interest rate, restructure the loan based on new circumstances, consolidate other debts, extend or renovate or get enhanced features and benefits that you didn't initially need.

Before the decision to refinance is made, there are a number of things you need to consider to ensure refinancing is in fact the best option for you. Make sure you understand the real costs of refinancing, including fees and charges that may apply to your loan, the features and benefits of the new loan, and any penalties for exiting your existing loan that may apply.

Most importantly, whatever the purpose of refinancing, the onus is on being able to make repayments. Don't get yourself into a loan that you can't afford. Also, don't forget that in many cases your existing lender may be able to make modifications to your loan to make it best suit your circumstances. It never hurts to ask.

How can you better manage your debt and use refinancing to the best effect? The following tips may help for those looking to refinance:

Understand why you are refinancing. If you are refinancing to make improvements to your property, you are adding long-term value which will in turn grow your equity. However if you are tapping into the equity in your property to pay for a holiday or a new car, make sure it's the right decision, especially in a lackluster property market which we are currently facing. In these cases you will be paying interest on the cost of your holiday over the life of the loan, with no prospect of building your equity.

Living on credit? If yo're using one debt facility to repay another you need to reconsider your options. While refinancing to consolidate your debts can help alleviate some financial strain, you should keep as much equity in your house as possible, and pay off that mortgage as quickly as possible to reduce your interest spend.

Consider the future. There are always unforeseen events that you can't plan for - be sure to have a little bit of financial flexibility up your sleeve, just in case. Are you realistic with what you can and can't afford? Put together a comprehensive household budget and look at all your expenses. Don't just rely on others' opinions of what you should or shouldn't borrow.

Re-visit your variable expenses. Costs such as gym membership, pay tv, internet and mobile phones can make up a considerable chunk of household spending. If you are struggling, can these be downgraded temporarily until you can get on top of your debts? You'll be amazed at how much you can save.

Are you starting to feel the pinch on your debt commitments? If you're struggling to repay your mortgage or credit card debt, speak to your lender now rather than allow the problem to fester. The earlier you identify a repayment problem, the greater the likelihood of a positive result. Remember, it's in no one's interest to see you default on your loan.

(Source Genworth Financial)