The number of people refinancing their home loans has increased steadily over the past few decades. With interest rates at an all-time low and better competitive deals on offer, more customers are looking to refinance their home loan to guarantee:
>> A lower interest rate
>> Save money by reducing your loan repayments
>> A more flexible home loan product offering redrawing facilities and a clearing account
>> A reduction in the time of your mortgage loan
>> Access to equity in their home loan so they can renovate their home, buy a new car, or even build a swimming pool
Change of circumstances
Change is inevitable, and you may now find that your situation has changed to the extent that you now seek to refinance, as a result of any of the following circumstances:
>> You may want to invest in another property
>> You have a new baby or another will be born
>> You may want to consolidate your credit card and personal loan debt, or
>> Your current interest rate is set above market value
An annual “financial health check” of your finances is important!
Regardless of your situation, it is always advisable to do an annual “financial review” of your home loan and personal finances. Since you would ask yourself some questions when you are not feeling well, you should analyze your finances in the same way and ask yourself the following questions to determine if your finances are in order:
>> Does your current lender / credit provider meet your needs?
>> Should you fix your home loan to create certainty about your monthly payments?
>> Would you prefer a “mix” of fixed and floating interest rates?
>> Does your current home loan product have all the features you need, like redrawing services and a clearing account?
>> Will you save money by refinancing?
>> What will be the impact of the costs involved in refinancing your home loan?
>> Will you now better manage your personal and household budget by refinancing?
So even if you don’t have any specific reason in mind, it’s always worth weighing your options from time to time. Consider doing a “Financial Health Check” of your personal finances and family budget. The “Financial Health Review” will allow you to at least determine if you have a legitimate reason to refinance, and if the long-term savings outweigh the short-term costs.
Refinancing can be very beneficial to you if done correctly and for the right reasons. Remember to find out if you will be better off switching to another lender / credit provider and if you will save money by switching.
Once you have determined that refinancing is right for your circumstances, you should seek the advice of a professionally qualified financial broker. The finance broker should have access to interest rate comparisons and should be able to show you the long-term savings and confirm whether these savings outweigh the short-term costs.
So, don’t jump on the bandwagon and refinance your home loan. Consider its consequences and get the advice of an expert financial broker to make a profitable decision.
