When it comes to home loans, most people spend time researching their options in order to get the loan that is right for them. However, once the dotted line has been signed, how many people to choose to review and revisit what they are paying?
A recent study has found that the majority of Australians have never changed or reviewed their lender or bank. While there is nothing wronng with being loyal to one banking institution, it is important to ensure that the lender they choose is still meeting their needs throughout the life of the loan. By having a simple home loan health check done, you may be surprised at what else is available.
Here are the top 4 benefits of refinancing your home loan:
1. Pay your mortgage off faster.
You may find that your financial situation has changed or your income has significantly increased since you first bought your home. Making larger monthly repayments or paying lump sum amounts may not be an option as part of your home loan terms. Refinancing could allow you to be making lump sum repayments or choosing a lower term to pay your home loan off sooner.
2. Lower your monthly repayment.
Refinancing can let you take advanatge of lower interest rates, special bank offers or unique loan products currently on offer. Over the life of your loan, it is expected that your financial situation or lifestyle will change, and refinancing to a different lender may be beneficial. It could allow you to save money through lower interest rates, lower bank fees and additional benefits.
3. Reducing the total interest paid on your mortgage.
Depending on your current loan terms and recent interest rates, you may be able to find a better deal which sees you paying less interest, and in turn paying off your loan quicker.
4. Unlock the equity in your home.
A major benefit of refinancing is the option to access the equity in your home. You can get a line of credit based on the value of your home and the amount that you've already paid on your mortgage. This is a great way to fund home renovations, or make an essential big-ticket purchase. The interest rate is equal to your mortgage rate, so borrowing from the equity in your home tends to be the most cost-effective financing option available to homeowners.
It is important to weigh up options with the cost of refinancing, as depending on your current loan terms, fees and charges may be applied if you choose to switch lenders. This is where a mortgage broker comes in! They compare all the benefits and potnential fees involved to determine which is the best option for you and your needs.
If you would like to take advantage of a free home loan health check to see how much you could be saving, give us a call at Mortgage Choice Unley to arrange an appointment at a time that suits you 08 8273 7970