The Benefits of Refinancing
Are you considering refinancing your mortgage due to the low interest rates currently on offer? Not sure if it’s going to provide any benefit to you? The reality is, with lenders positioning themselves to acquire new customers from their competitors, there are a number of benefits to refinancing.
Refinancing your mortgage can lower your monthly repayment
Refinancing could let you take advantage of the lower interest rates or sharper loan products currently available. Assuming that your financial situation has changed since first taking out your loan, refinancing to a new lender and/or loan could potentially allow you to benefit from significant savings. Reducing your monthly repayment by just $150 can save you around $50,000 over the life of the loan. You could even still contribute the extra $150 per month that you’ve saved, paying off the loan faster and in turn making additional savings.
You can pay your mortgage off faster
You may find yourself in a situation where you are earning significantly more income than you did when you initially purchased your home. Making extra repayments on your mortgage each month is not always allowed according to the loan terms, so refinancing could be the ideal option for you. Choosing to have your loan over 20 or 25 years rather than the customary 30 will also help you pay the loan off faster.
Refinancing lets you unlock the equity in your home
A major benefit to refinancing is that it allows you to access the equity in your home. If your home has increased in value since you first purchased then your equity stake has grown by default. By refinancing you will be borrowing against the new value of the property. Your loan will have also reduced since purchasing, thus further increasing the equity you have. You could use the available equity to invest, make renovations or even take a holiday. You may want a line of credit based on the value of your home and the amount that you've already paid on your mortgage?
Consolidate your debts
Refinancing can help you to consolidate debts such as a credit card, car loan or personal loan onto your mortgage at a much lower interest rate than you are currently paying. This makes controlling your finances much easier, and may potentially free up funds to make extra repayments on your mortgage.
If you’re considering refinancing your home loan, it definitely pays to shop around. As a mobile Mortgage Broker Maitland & Hunter Valley, I perform free home loan health checks to see if you are currently paying over the odds. It may turn out that the loan you are in suits your needs and there’s no need to refinance. On the other hand, you may end up saving significantly.
Feel free to call Mike Wilson on 0435 945 419 for more details.