March 01, 2016 by Rebecca Crommelin
Are you considering refinancing your mortgage but are unsure if it's the right option for you?
While there isn't a right or wrong answer to this question, there are several benefits to refinancing. Take a look at 5 advantages associated with refinancing your home loan.
1. Refinancing your current mortgage can lower your monthly repayment
Refinancing your home loan can allow you to take advantage of lower interest rates or more competitive loan products that are currently available. If your lifestyle and / or financial situation has changed since you first took out your loan, refinancing to a different lender or loan could potentially save you money with lower interest rates, added benefits, less fees etc.
2. You could reduce the total interest paid on your mortgage
Depending on the terms of your loan, the cost of refinancing and the interest rate you receive from refinancing - it's possible that you could pay less in total interest.
With that in mind, it's important that you carefully calculate the relative costs of refinancing your loan, and calculate your total payments to construct a more precise image.
3. You can pay your mortgage off faster
You may be in a situation where you have a greater income than you did when you first purchased your home. Some loan terms won't allow you to pay more on your mortgage each month, so it could be a good option for you to refinance your loan so you can re-adjust your loan terms. You could choose a lower term so you can pay off your home loan sooner.
4. Unlock the equity in your home by refinancing
Allowing you to access your home equity is one of the major benefits of refinancing. A lender will give you a line of credit based on the current value of your home and the amount that you have already paid on your mortgage. Unlocking your equity allows you to free up some cash to fund home renovations, purchase an investment property or pay for some upcoming expenses. The interest rate on this is the same as your existing home loan rate, this makes borrowing from the equity in your home one of the most cost-effective financing options for homeowners. Book an appointment with our expert brokers today if you'd like to discuss unlocking your home equity.
5. You can consolidate your debts
Refinancing can also help you to consolidate your current debts such as any credit cards, car loan or personal loans onto your mortgage - to make managing your finances much easier.
Book an appointment online with our team at Mortgage Choice in Perth CBD to discuss refinancing your home loan and find out whether it's the right option for you.
