There are no hard and fast rules when it comes to the ‘right time’ to refinance your home loan, but having the right home loan in place that best suits your circumstances can potentially save thousands of dollars and cut years off your mortgage.
Grant Strawbridge, Chief Executive Officer of Credit Union SA shares his refinancing tips:
Refinance to renovate
Avoid the hassle of moving to another home by doing up the one you’ve got. Unlocking equity in your home is the perfect way to fund that open-plan extension or the dream pool you’ve always wanted. Not only could a refinanced loan unlock extra funds, it could give you a lower interest rate too.
Switch to a new lender
When it comes to a lender it is important to pick one that has your interests’ top of mind. Whether it is convenient access, competitive rates, great customer service or some other way that makes you feel valued, don’t settle for second best. Switching lenders is not as hard as you think.
Lower interest rate
The home loan market is highly competitive so use that to your advantage by picking a provider that offers a low interest rate. A lower rate means that you will be charged less interest each month, which means you might want to reduce your repayments and have more money in your pocket - or continue your current level of repayments and pay off your loan sooner. When you shop around, ask a lender about any incentives to win your business – such as cashback refinance offer or no application fees to sweeten the deal.
Become a home owner quicker
Who doesn’t want to live mortgage-free? Refinancing and taking advantage of low-interest rates might be one way to take years off that 30-year mortgage through a shorter loan term. Even with a lower interest rate, having a loan for a shorter term normally means higher repayments – but if you can afford to pay them then you’re a big step closer to your home ownership dream coming true.
The banking sector is constantly changing, and the product features and flexibility around today probably were not available when you originally took out your current mortgage. Now is your chance to take advantage of things such as an extra repayment facility to make additional payments on top of regular ones, or having an offset account where the balance in the account reduces the amount of interest you pay on your home loan.
When refinancing, consider consolidating any personal and credit card debt as part of the process. The rate on a home loan, compared with personal and credit card debt, is usually much lower. It’s essential to seek advice, however, as it can be expensive in the long run to put short-term consumables under long-term finance.
For more information, please contact Credit Union SA on 08 8202 7777.
INFORMATION YOU SHOULD KNOW
This article is intended as general information only and has been prepared without taking into account the personal financial situation, objectives or needs of the reader. Before acting on this information, you should consider its appropriateness, having regard to your objectives, financial situation and needs. You should always seek professional advice or assistance before making any financial decisions.