February 23, 2018
The value of refinancing
A home loan is the most significant financial commitment for most households yet many Australians take a set and forget attitude when it comes to ensuring they’re getting the right deal for their situation. A recent survey by Mortgage Choice showed that 2 in 5 Australians did not know their home loan interest rate. Do you know yours?
Over the last twelve months, the Australian lending landscape has changed significantly. Regulatory changes have seen lenders tighten their pricing on investment loans and significant pricing changes were made to their suite of owner-occupied products.
If you’ve been in the same home loan product for some time, you may stand to benefit from getting a home loan health check or refinancing into a new product.
When you first settled your home loan, it may have been the right product for your needs at that time. That being said, ask yourself how life has changed since then. Are you still working in the same job? Have you received a pay increase or taken extended time off work? Have you experienced any life changing events such as marriage, divorce or having your first child? Have you taken on any other debt such as a personal loan, a car loan or credit card debt? Are you in a fixed rate home loan product that is nearing the end of its term?
If you answered yes to any of these questions, your needs would certainly have changed and there’s no reason your home loan shouldn’t change accordingly.
There are many reasons why you may decide to refinance your home loan:
- Of course, save yourself money by securing a sharper interest rate
- To access the equity in your home and undergo that renovation you’ve been putting off
- To consolidate other debt reduce your interest repayments
- To upgrade to a more spacious home that accommodates your growing family
Consider approaching your local mortgage broker for a home loan health check. A broker will be able to assess your full financial situation and determine whether you are still in a product that suits your current and ongoing financial needs. One of the many benefits of speaking to a broker is that unlike a lender, a broker can present you with a range of home loan products from a number of different lenders. A broker may be able to negotiate a sharper interest rate with your lender, help you switch from an interest only product to principal and interest, or help you access additional home loan features such as offset accounts or redraw facilities.