Why You Should Consider Refinancing Your Home Loan
Refinancing your home loan isn’t as complicated as it might sound. You can refinance a new loan with a new lender, or the renegotiation of your loan’s terms with the same lender. Refinancing can potentially save you thousands of dollars and/or reduce the life of your loan.
One of the most common reasons for refinancing is simply to switch to a deal with lower repayments and a lower interest rate. Even a small decrease can make a huge difference over the life of a loan.
Switching rate types
You can also refinance to switch to a fixed rate rather than the variable rate they initially agreed upon. After a few months or years on a variable rate, some people change their minds and decide that steady repayments are easier to manage.
Conversely, switching from a fixed rate to a variable rate might be worth the risk if the variable rate is significantly lower.
For some homeowners, consolidating their debts makes sense because it lowers interest rates and makes payments more manageable. Debt consolidation can have downsides, so it shouldn’t be done hastily—however it’s a valid reason to refinance.
Changing financial circumstances
The life of a loan is long, and your life can change significantly throughout the course of a home loan. Whether it’s a new baby, a marriage, a promotion or something else, a change in your financial situation can open up previously inaccessible opportunities.
Flexible repayments, for instance, allow you to pay off your loan sooner at no additional cost. If you’ve just received that hard-earned promotion, you may want to refinance to open up this opportunity, assuming your current package doesn’t allow for it.
Alternatively, if you have a child, you may need to refinance in order to arrange a repayment holiday—a temporary break from making repayments—during maternity leave.
Those are just a couple examples of how refinancing might be essential to handle (or capitalise upon) changing financial circumstances.
How can I figure out if refinancing is right for me?
Refinancing is the right move for many home owners. People have saved thousands of dollars and years of time by making wise refinancing choices.
It’s a good idea to review your home loan periodically to make sure that you’re always getting the best deal possible. Check out our switching mortgage calculator online.
If you have any questions about refinancing, or you’re already considering it, give us a call at 133-144. We’ll give you free advice, and help you determine whether or not refinancing is the right move for you!