Is it time to think about refinancing your home loan?

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 (this may mean you now have more equity in your home, so you may be able to get an even better interest rate)
• To be able to use the equity in your home to invest in property or renovate
• Consolidate your debts to make managing your money simpler, easier and potentially reducing your monthly repayments, fees and charges.

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. A Mortgage Choice broker can help you take advantage of a better loan more suited to you.

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 through refinancing.

Principal 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 v. variable rates

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

Refinancing could also come in handy if you want to find a lower 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 flexibility to move lenders with 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 know

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. If you'd like to know more about the costs involved, check it out here.

More importantly, you're not in this journey alone! If you're not sure if you’re in a position to refinance, that’s not a problem, as we can help you with that. Your local Mortgage Choice broker can help you determine whether it’s a good move for you, as well as assist you throughout the process. It’s worth talking to an expert. Not only does it help having an expert on your side, they will also look at a wide range of lenders on our panel so you can choose a home loan that suits you.

If you walk away with one thing after this article, it’s to make sure you’re always taking advantage of your unique situation and the current market conditions. After your loan has settled, don’t set and forget. There are potential savings out there, so go and get them.

You may also be interested in:

• Home Loan Health Check
• Compare Home Loans