August 02, 2024 by Michael Bloomfield
Five reasons to refinance your home loan
Here are five reasons people refinance their loan.
You can save money with a better interest rate
Your interest rate may have been competitive when you first took out your loan, but this can easily change over time. Securing a better interest rate can help lower your monthly repayments and potentially cut thousands of dollars from the overall cost of your loan.
You can ensure your loan matches your needs
If your current loan has a variable interest rate, you may decide that you would prefer the certainty of a fixed rate. Or perhaps you want to fix part of your loan and keep the rest variable. Refinancing can help you find what you’re looking for. It may even be possible to do this with your current lender without needing to refinance.
You can look at consolidating other debts
Even with rising interest rates, mortgage rates tend to be much lower than other types of debt such as credit cards and personal loans. Refinancing your home loan gives you the opportunity to roll other expensive debts into your mortgage, which may reduce the total amount of interest you’re paying. Debt consolidation also streamlines debt management because you only have to make one monthly repayment instead of multiple. The main thing you need to consider with this strategy is that it can turn a short-term debt into a long-term debt. For debt consolidation to be truly cost effective, you need to commit to making additional repayments to pay off the enlarged loan as quickly as possible.
You can ensure your loan matches your lifestyle
If your current loan doesn’t suit you anymore, you may want to switch to a loan that does. This might mean accessing features such as a redraw facility or offset account, or even taking advantage of a bundled package loan offering. On the flip side, if you’re not using most of the features that come with your current home loan, it might be worth switching to a more basic loan. These loans generally cost a bit less than home loans with lots of features.
You can take advantage of equity to renovate or invest
Your home can be much more than a place to live. It’s also likely to be one of your most valuable assets. If you’ve lived in your home for a while, it's likely that its market value has increased. This means you’ve built up some equity that you can tap into. Refinancing can help you unlock the equity in your home to finance a renovation, take a holiday or use as a deposit to purchase an investment property.
Now is a great time for a home loan review
We’ll evaluate your current home loan and compare its rates, fees and features with thousands of other products to check that you have the loan that’s best for you.
Even if you aren’t ready now a home loan review can help identify opportunities and help you plan for the future.
If you would like to discuss how a review works contact me on 0412 973 386 | michael.bloomfield.mortgagechoice.com.au
