With the New Year well underway, and summer in full swing, are you starting to feel the heat of your home loan? By refinancing you might be able to repay your home loan sooner and get on the right track to achieving any other financial goals you may have.
With such a variety of home loans currently available, combined with recent cuts made by the Reserve Bank to the official cash rate, it makes good financial sense for borrowers to regularly check if their existing home loan still suits their current needs.
If a borrower’s financial and/or lifestyle situation has altered since taking out their home loan, refinancing to a new lender and/or loan could potentially allow borrowers to benefit from savings such as lower interest rates, fewer fees, additional or more beneficial features offered by other products.
It is important to remember though, that refinancing isn’t about the interest rate alone, and that all aspects of a loan should be taken into consideration, including any upfront, ongoing and exit fees, the availability of features and the quality of customer service provided. Keep in mind that refinancing can also involve new costs such as application fees, lenders’ mortgage insurance, mortgage registration fees, break costs, etc.
To help you get a sense for whether a home loan refinance is for you, and whether now is the right time for you to do it, I have put together a few simple steps to help get the ball rolling:
Make preliminary calculations. Before you shop around to compare your loan options, get a clear understanding of your loan’s fees, ongoing costs, features and interest rate. You want to compare the overall costs of switching loans versus the overall savings to ensure that refinancing is in your best interest.
Know what you really need from a home loan. A low interest rate is important but it’s not everything. Decide on the loan features you feel will help you achieve your goals sooner. Keep in mind some might have fees attached, depending on the product. You may also be able to save money by dropping features you don’t use.
Hunt in the home loan market. Do this by trawling loan comparison websites, calling lenders or better yet, have an experienced mortgage broker research the options for you. This will give you a solid idea of how your current loan stacks up in today’s market place.
Negotiate with your lender for a better deal. Now you have a good idea of your loan’s value compared to other loans, see if your lender is eager to retain your business by sweetening their offering.
Looking ahead. If you do choose to refinance, keep in mind that even though you might acquire a lower interest rate, fewer fees and/or more beneficial features, the best way to be debt free sooner is to take proactive steps to contribute more to your home loan when you can.
Once you have exhausted all of these avenues, and feel almost certain that refinancing is a great option for you to live debt free sooner, visit your local mortgage broker to discuss your options in the current market.
Alternatively, you could get a free home loan health check this summer, and let the experts do the number crunching and help you make the right decision. Refinancing may help to ease a little of that heat on your home loan!
For more information contact Richard Windeyer on 1800 01 LOAN or click here to "Book a Meeting"