Refinancing a Home Loan
One of the most significant aspects of your home loan is its length. People borrow money for all sorts of reasons but most of these loans are for a short or relatively short period of time. Not so with a mortgage. In the vast majority of cases you borrow to buy your place of residence with a loan lasting 20, 25 or even 30 years. Now a lot can change in that time.
Your financial situation could improve or be reduced. The economy of Australia could improve or take a turn for the worse. The interest rates set by the Reserve Bank could move significantly up or down. And all of this means that at some time in the period of your loan you might wish to refinance. You may feel it would be a sound economic move to change your loan arrangement.
There are several reasons to make such a move. Here are just some. You can save money. If interest rates have changed and you can obtain a cheaper loan rate, you will save money, pay off your loan quicker and be debt free sooner. That makes sense.
Take advantage of your better situation. If the value of your property has increased substantially, you can refinance knowing the equity is available and use the new funds to invest for the future. You could also pay for your children’s education or some other worthwhile expenditure.
You can get rid of other loans and consolidate your debts. You may have money owing on credit cards and by refinancing you can remove all these smaller debts and have only your new refinanced home equity loan to pay. Clean up your financial act, so to speak.
The costs involved in breaking your home loan may be high but even if they are costly, a new home loan rate could see your net costs significantly reduced. In short, you could save some serious money.
Times are different
If you took out your present home loan 15 or 20 years ago, you would have been dealing with a different financial situation. Banking and home loans in Australia have changed. Your refinanced home loan might include different elements including a line of credit, offset accounts and the facility to redraw funds.
Whilst most people went to “their” bank out of loyalty to get a home loan, “their bank” may no longer be competitive. There are probably numerous lenders available that could give you a better deal, but how do you find them? Trying to compare the rates, fees and charges and features of each lender is mind boggling.
Our software enables us to save you time and money by comparing different loans.
Most people have their health checked on a regular basis particularly as they grow older. The same can and should happen with your mortgage. Get its health checked out to see how it is working. If it’s sick it might need some sort of overhaul including refinancing.