Finance Oct 21, 2016

Is Now the Right Time to Refinance Your Home Loan?

8 min read


Now that loan holders have had the time to digest the record-low level interest rates they are beginning to look at the interest rates they are paying and may be questioning why they’re paying so much.

Many customers will be wanting to explore the best finance options available to them, especially as those homeowners who bought between the late 2013 and the latter part of 2015 will benefit from refinancing their home loan.

In an environment of falling interest rates, intense competition between lenders and with new products constantly emerging, it makes good financial sense for borrowers to regularly check their existing home loan offers for competitive interest rates, minimal fees and value for money features that will suit your future investment goals and current needs.

We recommend you review your home loan at least once a year. How do you know when it is the right time to refinance your home loan? Have you found a lower interest rate? Many are choosing to refinance to take advantage of money-saving features in the current competitive home loan market.

What are Today’s Mortgage Rates?

Mortgage rates today are much lower than almost any expected in 2016 and current property owners will benefit greatly from this interest rate cut. 2 & 3 year fixed rates have fluctuated between mid to high 4%’s since 2013, but are now at a generational low in the high 3%’s.

Overview of Refinancing

Mortgage refinancing can save you money and give you financial flexibility. Before refinancing, the homeowner should consider their circumstances over the next three years. Ask yourself whether flexibility, a lower interest rate, lower fees or debt consolidation is your goal.

Wanting a lower interest rate and lower repayments is one of the most common reasons to refinance your home loan. With the recent interest rate cut, home loan markets are on high alert for a rush of mortgage customers looking to refinance or fix their home loans. Even a slight decrease of 0.5% on your interest rate can make thousands of dollars difference over a long-term loan.

Mortgage refinancing means to pay off an existing loan and replacing it with a new one. Refinancing, with the right help, can be relatively simple process, in which you pay out your current home loan by taking out a new, more cost-efficient and beneficial home loan with lower interest rates. This may involve switching to a different lender or loan product. There are many common reasons why property owners may choose to refinance their loan:

  • Obtain a lower interest rate.
  • Shorten the term of your mortgage.
  • Convert from an variable-rate mortgage to a fixed-rate mortgage, or vice versa.
  • Use your property’s equity in order to finance another purchase.

When is the Right Time to Refinance Your Home Loan?

The right time to refinance your loan is dependent on your personal situation and you should discuss your options carefully with your mortgage broker or financial adviser to ensure your best interests are taken into consideration.

Secure a Lower Interest Rate

One of the most common reasons to refinance your home loan is to lower the interest rate on your existing loan. Reducing your interest rate will help you save money, and also increase the rate at which you build equity on your home and it can help to decrease the size of your monthly repayments.

Lock in a Low Rate for the Next 3-5 Years

Switching from a variable to a fixed rate loan when interest rates are low means you can lock in a low rate for the next 5 years. When you refinance to a fixed rate home loan you have the security of fixed repayments for a set period of time. Changing to a loan with a low fixed interest rate can also save you thousands of dollars over the entirety of the loan.

Shorten the Loan’s Term

When interest rates lower, homeowners have the opportunity to refinance an existing home loan for another loan that, without much change in the monthly repayments, will have a shorter term.

Convert Between Variable-Rate and Fixed-Rate Mortgages

Variable-rate mortgages begin offering lower rates than fixed-rate mortgages and with periodic adjustments often result in rate increases that are higher than the rate available through a fixed rate mortgage. When this occurs, converting to a fixed-rate mortgages results in lower interest rates as well as eliminating concerns over future interest rate spikes.
Refinancing your home loan can be a difficult choice. You may see a better rate is available but will you end up saving money by refinancing? If you do it right, at the right time and with our expert help at Entourage Finance, you could end up saving a great amount of money! With mortgage rates today being at an all time low, get in contact today and find out or competitive rates available.

– Damien Roylance