Refinancing: Why and when should you do it?
5 min read
Refinancing your home loan can result in some great financial benefits. Make sure you review your home loan, interest rate and product features every few years.
When was the last time you reviewed your home loan interest rate? If it was more than 18 months ago then it’s probably been too long. We know the drill. You have to go through the process of digging out all your income details, your bank statements, and all sorts of other bits of paperwork. The loan gets approved by the bank and you gladly stuff everything into the back of the filing cabinet never to be seen again.
But the truth is, if you do that, then you’re probably disadvantaging yourself and losing heaps of money to boot. So, why and when should you look at refinancing?
Refinancing to get a better interest rate
Banks, credit unions and money lenders alike change their interest rates on a monthly basis. Depending on whether your loan is owner-occupied or an investment loan, fixed or variable you may find another lender can offer you a better interest rate when you refinance than your current mortgage provider.
Access new product features and offers
Loans aren’t just about the interest rate though. Sometimes the reason for refinancing your lending may be the product itself doesn’t suit you anymore as it doesn’t have things you need like an offset account or line of credit. Or you may change jobs/careers and find you can refinance to a product with different features that you weren’t able to access before.
Refinancing to get cash back
You might find a new lender offers an incentive to refinance, for example a cash deposit into your accounts. Coupled with a new rate this can make the savings to you even greater than if you swapped for interest rate alone.
You might be looking to consolidate car loans, personal loans or credit cards into the one repayment. If you do decide to do this, then refinancing everything into your home loan might be an option to consider.
Refinancing to access equity
If you’re thinking of renovating, buying an investment or accessing the equity in your property for other purposes then refinancing is a way you can do this. It pays to look at other options, rather than just contacting your current lender.
By reviewing your home loan features and interest rate every couple of years, you’re more likely to save yourself money. And it can be a lot of money depending on the size of your loan/s, product features and the loan structure. In all situations, it pays to have a mortgage broker on your side who can compare lots of different home loans lenders and products, who’ll look beyond the interest rates at the product features and various incentives.
Ready to have a chat about whether refinancing could save you money? Chat with Entourage Finance on 03 9461 1651 or contact us today to review your current financial position. Entourage Finance will never recommend you change your home loan unless it is going to bring you financial benefit – if your current home loan is the best, then we’ll tell you.