3 reasons to refinance your home loan
1. Pay less interest, shorten your loan, boost your savings
Sick of interest repayments eating away at your dreams of renovations, investment properties and travel? Staying on top of your mortgage with the right lender and mortgage product is not as hard as you think. What’s more, it’s a surprisingly easy way to stop paying additional interest and put those savings somewhere they count. The truth is, a mortgage deal signed three years ago, is not likely to be the best mortgage deal for you today.
What’s more, your loan product might not have the facilities that allow for greater flexibility offered by other more competitive options:
Redraw: the withdrawal of funds from previous repayments made, in case you’re short on cash.
Flexible rate options:allows for switching between fixed and variable rates, or splitting your loan between the two. Helps you to organise your mortgage to suit interest rate movements
Portability: being able to take your loan with you when you move house can help you save on fees when the time comes.
(If these all sound terribly unfamiliar, you might want to start thinking about *. It’s not a dirty word.)
2. Streamline your debt
Consolidate your debts and work towards cleaning up that credit history. By reviewing your existing debts and mortgage, and combining them into a new mortgage, you can condense them into one, more manageable monthly repayment. This is only a viable solution where the cost of the new loan, inclusive of fees and interest, is less than the amount you are currently paying across your debts. If you do fit into this category, however, it can make a world of difference. So if your credit card, car loan, personal loan and overdraft repayments are stacking up, it’s certainly worth talking to a to see if debt consolidation could make your life easier.
3. Get savvy and cash out home equity for investments
Ever wondered how some people manage to buy that great investment property on the coast AND that shiny new car, all the while paying off their mortgage? Chances are, they refinanced* and used the equity from their first property.
Home equity is the difference between the total value of your home and the balance of your mortgage. Refinancing your home loan can be a smart way to access this home equity to invest in areas like property, shares, or managed funds.
Refinancing could allow you to acquire another property and, (if you’re ultra savvy), pay off your mortgage faster, using your existing residential property as security for the loan - the dream!
*Consolidation/Refinancing is subject to various lender imposed terms and conditions including but not limited to loan serviceability, valuations and confirmed capacity to service both any existing and revised lending arrangements
As with any financial scenario there are risks involved. This information provides an overview or summary only and it should not be considered a comprehensive analysis. You should before acting in reliance upon this information seek independent professional lending or taxation advice as appropriate specific to your objectives, financial circumstances or needs.