April 28, 2017
Wondering if you are on the best home loan for your personal situation? Here’s some information to help you decide whether to make the switch.
When is it the right time to shop around?
We recommend looking into your options around every 2 years to ensure you are on the best home loan, so many changes can happen within the market or your personal life in that time. In saying that, below are some reason you should definitely look around.
Your interest rate is high
If you believe you are paying an interest rate that is too high, you should absolutely have a look at what else is on the market. Remember to ensure your LVR is under 80% and that you are not within a fixed term period though as the exit costs and LMI could mean you end up paying more than you are now.
You want cash out
If you are wanting to withdraw some equity from your home loan refinancing could be your best option. Your cash out does not need to be used only for renovations, you could use it on anything from a holiday to a deposit of another property.
You want to consolidate
If you have other debts and you have enough equity in your home loan, why not roll them all into one? You could be saving a lot on interest as credit cards have interest rates significantly higher than home loans.
Your fixed rate is about to expire
If you are coming to the end of your fixed rate period and the rates on offer at the moment at quite low, why not take advantage and refinance to another fixed period. This is a good option for people who just want to pay the required payments and are not concerned with paying their loan off earlier than the loan term.
When should I sit tight?
You want a lower rate but your LVR is higher than 80%
If your LVR is greater than 80% we very rarely recommend refinancing as you are better off sticking it out where you are until you no longer have to pay LMI when refinancing. In saying that, you can always ask your bank if they can offer you a better rate. You would be surprised how often they will lower your rate to keep your business.
You are currently in a fixed period of your home loan
Banks are only allowed to charge exit fees from fixed rates and the fees can be quite substantial. Before jumping into a refinance ask your bank what your exit fees are and take that into account when looking at your other options. More often than not the amount of money you will need to pay in fees will outweigh the savings from a lower rate.
It is always best to seek advice on what current offers suit your needs best. We would love to sit down and discuss your options for refinancing today.