Refinancing is when you move your home loan from one lender to another or you can apply for a new home loan with your current lender. Lender’s change their home loan products and interest rates continuously so it is important that your mortgage broker keeps you up to date with the changes. Your needs and situation now may be very different to when you first took out your current home loan. It is important that your mortgage broker reviews your home loan to ensure you are still getting the best deal available.
The benefits of refinancing
When considering refinancing, you will need to think of the benefits of a new home loan that could make it more affordable and help you save more in the long term.
1. Interest rate reductions
Refinancing your home loan could make a significant difference to your monthly repayments and save you in the long term. Remember any reduction in interest rates could save you thousands that will help you pay your loan off quicker.
2. Maximise your home loan features
Home loans have changed significantly over the last 30 years with many adapting to customer needs. Home loans now have the option of offset and redraw facilities. You have the option to apply for a line of credit as a home loan, this product is like an overdraft facility and you only pay interest on the money you have borrowed. These features can help reduce the amount of interest you pay and the life of the home loan.
3. Consolidating debts
Merging your current debts (i.e credit cards, personal and car loans) can help reduce your monthly repayments and interest paid. Consolidating your debts can help manage your cash flow and create one repayment.
4. Release equity
Refinancing your home loan, provided you have good equity in your property, will allow you to possibly buy investment properties or renovate your current property.
5. Adjusting the loan term
Once you have had a home loan for a number of years, you might not want to restart a new loan of 30 years. With the help of your mortgage broker, the loan term can be adjusted to suit your needs by recommending a loan with a shorter term.
6. Structuring your home loan
Just remember your mortgage can help you structure a new loan to include fixed, variable or a combination of both to suit your needs and circumstances.