Why Should I Refinance my Mortgage?
As a homeowner, your lifestyle changes and you have to make sure your loan still meets your needs and gives you the best opportunity to pay off your loan faster.
Buying your own home is a major financial decision and should be your top priority. Just as Aussies are encouraged to keep their service providers like phone and insurance companies accountable by making regular comparisons and switching to better deals – home loan lenders are no exception.
Below are a few scenarios that should act as a prompt for you to consider refinancing
To get a better deal
Did you know 82% of Aussies are unaware of their mortgage rate? If you’re one of them, you could be missing out on savings that come with switching your home loan to a lower rate.
Especially if you’ve had a home loan for a few years, refinancing could help you lower your repayments and open up your cash flow for other expenses. With interest rates low and competition between lenders high, you may be paying too much, and it’s worth shopping around to get the best possible deal.
Your needs evolve and so should your home loan
As your lifestyle changes, you should make sure that you have the right financial products to help you achieve your goals. Your home loan being the most significant financial commitment should be your primary focus.
You may have found a higher paying job, got married or had children in the years since you moved into your home. Alternatively, you may be getting close to finishing the fixed rate or interest-only term on your home loan. Significant life events like these are an excellent time to re-evaluate your options to ensure your home loan is still in line with your needs and goals.
Pay off your loan faster
As your financial situation changes and improves over the years, you might be able to contribute more towards your home loan and settle your mortgage earlier.
If your loan doesn’t already have a redraw facility or an offset account, it’s worth refinancing to a loan that offers these interest-saving features. Using your offset account as your main savings account and putting in all your income, bonuses and dividends into this one account will reduce your home loan balance and save you interest. You could take months and even years off the life of your loan, while still having ready access to your excess funds when required.
To access equity
One of the main benefits of owning property is the rise in property value over time, especially in areas of high growth. Even a few years is enough to accumulate equity in your property which can be accessed to fund home renovations or purchase an investment property.
Your home equity is the difference between your home loan balance and the current market value of your home. A simple home evaluation that can be organised by a lender like Mortgage House, will give you an estimate of the equity at your disposal.
You may be able to draw down on your equity to help fund a renovation or upgrade your home. You may also want to use your equity to help purchase an investment property or guarantee your child’s first home.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying your first home or investing in property, you can contact us for information about the best options for you when it comes to your mortgage.