Is it time you thought about refinancing your home loan?

The home loan market at the moment is looking pretty good. With rates at an all-time low, it begs the question – is it time to reconsider your options when it comes to your home loan?

Article up to date as at 14th January 2020

Whether you’ve not considered refinancing before, or you’ve started some research, it can be difficult to know where to start with reviewing your current loan and how to find if there’s something better out there for you.

But that’s why we’re here. If you’d like to learn more about how refinancing could help you, read on.

Quick tip: Refinancing is also known as ‘refi’ – just in case you’ve heard the term thrown around or you’d like to throw it around yourself.

What is refinancing and why consider it?

Refinancing your home loan essentially means you’re taking out a new loan to pay off your current loan.

Why would you want to do that? Whether you’ve had your home loan for a number of years and it’s no longer meeting your needs or your financial situation has changed, you can look into a range of different home loans on the market that may offer superior features and add-ons to better suit you.

The main reasons to refinance your home or investment loan:

  • To take advantage of a better interest rate
  • You’d like new features or add-ons to your loan
  • Your property value has increased (you may receive a better interest rate as a borrower with more equity)
  • Use the equity on your home, for example, to invest in property or renovate
  • Consolidate your debts to make managing your money easier

Whether you have a specific reason as to why you want to refinance or not, it’s good to know what’s on the market from time to time. Home loan products can change so much over the years. Your Mortgage Choice broker can help you take advantage of a loan more suited to you.

Is your lender playing games with your mortgage? With interest rates at historic lows, you could save on your home loan. Speak with a local expert today for a free home loan health check.

What type of repayments are you making?

It’s good to step back and think about what type of repayments you’re currently making and how refinancing could help.

Interest only

Once the interest-only period comes to an end, you might want to see what your repayments would jump to and whether there’s a better option on the market for you.

Principle and interest

If you’re currently paying off the principal and interest, however your interest rate has changed recently or you’ve found a better and more competitive rate out on the market – this could also be a sign to consider your options to refinance.

Fixed rates vs variable rates

With fixed rates, you have predictable repayments over the fixed period (term) of your home loan. If your fixed rate period (term) is coming to an end and the rate (you’re) you will be charged is quite different, shopping around for a better option may be worthwhile.

Refinancing comes in handy if you want to find a better interest rate, fix part of your loan again or to help with managing your money.

If you’re paying a variable rate, you might enjoy the flexibility of making additional payments, taking advantage of current low interest rates or want the flexibility to move lenders with (less) fewer fees involved.

Refinancing could open up your opportunities to reduce ongoing fees or take advantage of home loan features you might not currently have.

Other things you should consider

  • You need to make sure it’s worth the cost. Refinancing your home loan can come with some unexpected fees. A mix of entry, exit and application fees (and more) may outweigh the cost benefits of refinancing in the first place.
  • A chat between your broker and current lender.
  • It could be worthwhile chatting to your broker who can speak with your current lender to determine if they can lower your interest rate or make other changes to keep you as their customer. Your broker can ask the questions you might not feel comfortable asking along with the expertise to help you receive a loan most suited to your needs, especially in the current rate environment.

This may work more in your favour if you’re on top of all of your payments and you’ve been loyal to your lender for many years.

Not sure if you’re in a position to refinance? That’s not a problem, we can help you with that. Our Mortgage Choice brokers can help you determine whether it’s the right move for you as well as assist you throughout the entire process. It’s worth talking to an expert.

Posted in: Home loans