Thinking of Refinancing Your Home Loan?


With interest rates at an all time low, have you considered refinancing your home loan? It’s easy to get lulled into a false sense of security with your home loan, but home loan products change quite often.

Refinancing can be a great way to get a better deal or more favorable terms and conditions for your home loan. In December 2014, home loan refinancing in Australia rose to a three-year high, and providers are certainly keen to offer you the most competitive rates! It’s now easier than ever for you to change your home loan provider, and it’s a decision that could save you thousands of dollars over the life of your loan.

Why refinance?
So should you consider refinancing as an option for you and your home? There are many potential positives to home loan refinancing: you can increase the amount of your loan (and perhaps undertake those renovations you’ve been putting off), or you could simply secure a lower interest rate (which may reduce your repayments).

Refinancing could be a good way to consolidate your debts; if you have credit cards, store cards, a car loan or even a personal loan you may be able to combine them with your home loan during a mortgage refinance. Interest rates are generally lower for a home loan than other kinds of loans, so this may also help you save money. However, look very closely at all the contractual terms and agreements, thoroughly investigate interest rates and ask about set-up costs, exits fees, stamp duty taxes, and any other potential hidden charges that can come with changing lenders.

Save with equity
Depending on your circumstances, you may be able to use the equity in your home to pay for any property renovations or improvements you may want to undertake; property improvements may increase the value of your property, but leveraging the equity in your home may increase the term of your home loan – meaning that you’ll be paying off your mortgage for longer. Refinancing may help you achieve your property investment goals but make sure you consider the short, medium and long-term implications of refinancing.

Proceed with caution
Refinancing can have positive financial benefits but changing your home loan provider can also be expensive.  Fees and charges may apply for the changes to your home loan, so make sure to read the fine print. It is highly recommended that you think about how your personal situation may change over the next three to five years. How might your circumstances change? This will help you think about the whole life of the loan, not just the immediate benefits it may make to your current circumstances. Before signing on to a new agreement, make sure that the financial benefits always outweigh the costs.

The Final Word
Choosing a home loan is a complicated process; sometimes we don’t make the best decision the first time around, and sometimes our circumstances change and the home loan that worked a few years ago just doesn’t suit present circumstances. Don’t be afraid to consider refinancing your home loan but always do your due diligence and compare providers to make sure you get the very best deal for your home, your family and your lifestyle.

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