Refinancing your home loan: things to consider.
Your home loan is the one of the biggest and most significant financial commitments you’ll ever make.
But many people don’t realise that regularly revisiting your home loan, like you would your insurance provider, can save you a significant amount of money.
Home loans become less competitive over time and your current one might not suit you. Your life circumstances might change and you may need different features or add-ons, that your current loan doesn’t have.
That’s the perfect time to consider refinancing.
Refinancing involves replacing your current loan with a newer one that typically attracts different features, a lower interest rate and lower fees. Over the life of a loan, you could potentially save thousands of dollars by refinancing.
Here are the questions you need to think about before refinancing:
Is refinancing the right choice for you?
Usually people refinance to get a more competitive interest rate, but there are other reasons too:
- You need to access your home equity to finance renovations or an investment.
- You want a more flexible or suitable home loan.
- You want to consolidate your debts to make managing your finances simpler.
- Your circumstances have changed and your loan no longer meets your needs.
Refinancing isn’t always the right choice, especially if you don’t think you’ll be able to meet the repayments on the new loan.
But if done right, refinancing can help you pay lower interest and fees than you previously were.
Can you make the maths work?
Before you start shopping around for new loans, it pays to do the sums. Figure out what costs you might attract by switching over your loan, such as exit fees from your previous provider to discharge the mortgage and release security over the property and set up costs for the new one.
When deciding on a loan, take into account the interest rate, associated fees and useful features such as access to free redraw. Some services will offer additional benefits such as discounts on other products like credit cards.
Choosing right can help you save thousands over the life of the loan; money you can save or use to pay off your mortgage faster.
Always work to your personal goals
Personal finance is personal for a reason; you have your own goals and refinancing can help you achieve some of them faster. And we’re here to help. Give us a call to talk through your refinancing options on 1300 654 822.