Refinancing your home loan can mean so much more than saving money with lower interest rates – making the right move could see you make savings in more ways than one!
If you haven’t reviewed your mortgage in a while, it makes sense to give it a once-over. We sometimes call it a home loan health check. But whatever you call it, it makes sense to revisit your mortgage, to see if you could save money. New lending products and interest rate offers are released often, couple that with any changes in your own situation, and reviewing your lending situation should be as regular as a professional teeth clean at the dentist – although in this case you want to come out with more money in your pocket!
Lower rates mean more money in your pockets
Even a minor change in interest rates could have a big impact on your savings over a 25 or 30 year loan. You may have got the right deal for you when you when you first applied for your home loan, but things change. The world of finance and interest rates is constantly changing and you could end up making big savings by taking advantage of dips in interest rates.
Gain from the entire package
You’d think a loan, was a loan, was a loan, right? But no. There are so many different loan features that can help you save money and come out a winner. Interest rates are just one way to save when it comes to mortgage refinancing.
When you refinance you don’t just sign up for lower interest rates, you also get the chance to look at new loan features. This could mean being able to make extra repayments on your home loan without paying penalty fees. Or, how about the option to repay your home loan fortnightly instead of monthly? Some loan options even offer offset accounts which can see you save even more on interest.
Flexibility to change your loan period to suit your circumstances
Life is full of surprises, big ones, little ones, always hiding just around the corner. Your life is going to change and so is your financial situation so why should your mortgage stay the same, especially when home loans are one of the largest financial decisions that people ever make in their lives?
You may want to lengthen your loan period to help make your monthly or fortnightly repayments smaller if you’re going through a tough time. Or, you may want to shorten your loan term by making additional payments without being penalised for paying your money into your own account! Whatever your circumstances, you should be able to choose what’s right for you.
Consolidate your debts
Debt happens. We get it. Juggling multiple debts only makes debt more stressful and makes you more likely to accidentally miss repayments. If you’re a homeowner mortgage refinancing could be the perfect opportunity to consolidate all of your debts under one roof.
Debt consolidation could do away with the complexities while also making way for big savings.
The interest rate you pay on your home loan can often be much lower than what you’re paying on personal loans and credit cards. Refinancing lets you consolidate your debts to put them all under the same (hopefully low interest) package. This also means that your short-term personal loans could now become a long-term home loan, taking the pressure off your shoulders.
Invest in your home equity
Your home is the asset that you could bank on when in need – having to pay your mortgage off should not hold you back from making the most of your asset. Mortgage refinancing can give you financial freedom by opening a line of credit for your home.
Opening a line of credit or accessing your equity means borrowing money based on the value of your home. How much you can borrow depends on how much of your mortgage you have repaid and what your home is worth now. For example, if your home is valued at $500,000 and you have $200,000 to repay on your mortgage, you would have $300,000 in equity in your home. You could use this to fund an investment opportunity or get that dream renovation rolling while still paying off your mortgage. Don’t forget though, equity isn’t free money (we wish). If you borrow more money against your equity your loan repayments will increase.
Want to find out if refinancing could save you money? Give us a call 07 3899 2866 – it will only take a few minutes and could mean big savings!