Reviewing your debt with a view to improving your financial situation through refinancing can help you to save money if used in the right circumstances.
It’s important to engage the services of a professional Mortgage Broker to help you ascertain whether the benefits outweigh any costs.
Some benefits of refinancing include:
Consolidating multiple loans into one more manageable loan
If you are feeling the pinch of multiple debts and monthly loan repayments – home loan, car loan, personal loan, credit cards – combining your outstanding debts, also referred to as Debt Consolidation, may help you to better manage your finances.
By rolling all of your loans into one single loan, not only will you reduce the burden of multiple creditors and multiple payments, you may also be able to secure a reduced interest rate, lowering your overall monthly repayment.
Reduced monthly loan repayments
By refinancing you could take advantage of a lower interest rate – whether it be fixed or variable or a mix of both – and reduce your monthly loan repayment. It’s important to know that if you are consolidating shorter-term debts (like a car or personal loan) into a home loan, you are spreading the debt out over a longer period of time. Whilst your monthly repayment may be lower, over the long term you may end up paying more.
Reduced interest payments
Dependent on your new loan terms, any costs associated with refinancing and your newly negotiated interest rate, you may be in a position to pay less in total interest. We can help you ascertain any interest savings you can make by reviewing a range of possible loan options.
Paying off your mortgage off faster
If you took out your mortgage or home loan some time ago, it’s likely your personal circumstances have changed somewhat. You may be earning more income or the kids may have moved out (saving you money), leaving you in a position to pay more in repayments. Some loans simply don’t allow this flexibility, so refinancing in this instance, to allow for additional repayments could see you pay off your loan over a much shorter period of time.
Accessing the equity in your home
If updating the bathroom, purchasing a new car, investing in property or shares or taking an extended overseas trip is on your ‘To Do List’, refinancing could be your answer. Refinancing allows you to access any equity built up in your home to fund big-ticket items. With Australian property prices constantly moving, you may just be surprised by the amount of equity your home can provide. If you’d like an indication of how much equity you have in your home, ask us for a free property valuation report for your property.
Naturally your decision to refinance your loan will be dependent on a number of factors including the age of your loan, existing loan structure and of course your future plans but if there is money to be saved we can certainly show you how.