Refinancing your mortgage can open up a world of opportunities for you. Keeping your options open and shopping around every few years can result in more savings, more flexibility and lower interest rates; giving you the freedom to take that next step.
Sounds like a no-brainer? In most circumstances, it is. It’s important to remember that no two individuals and no two mortgages are the same. So, before taking the plunge and starting to call around, have a read of some simple advice below.
Refinance, when it makes financial sense for you.
Talk to (and trust in) your mortgage broker. Make sure they know of your long term goals and current financial position.
Mortgage refinancing often means lower rates, but there is sometimes a catch.
The most common reason for people to refinance their mortgage is to get a better deal. But be careful you don’t become interest rate-fixated. When you refinance your home loan, you need to consider fees and charges as well as the interest rate. You often have to pay charges for exiting
your current home loan, plus charges for taking out the new mortgage. You need to be sure that in refinancing your home loan that you’ll be better off in the long run after taking into account all costs.
Increased flexibility and more possibilities!
Many people only discover the full details about their mortgage when it’s too late. They try to do something and get told by their lender that either they can’t do it, or they will incur a hefty charge if they do. An example is a redraw facility or an offset account. These features may not be possible with a basic home loan, so many people refinance their mortgage to give themselves this sort of increased flexibility.
Mortgage refinancing is an excellent way to support renovations.
If you carry out renovations, it often makes sense to refinance your mortgage and take out a construction loan so you only pay interest as building progresses. Once construction is over, it might make sense to refinance your home loan again so that you consolidate the total amount you owe into a loan that minimises your interest bill, while giving you a degree of liquidity.
Discover home equity that you can tap into
Over recent years in the property market houses have appreciated at a significant rate. e.g. a home you bought for $300,000 five years ago, might now be worth $500,000. Refinancing your mortgage with a home equity loan might let you tap into that extra $200,000 equity.
Mortgage refinancing can be a savior if you are at risk of defaulting.
If you are in a position where you have borrowed more than you can comfortably repay, that;s okay. There’s no shame in that. But don’t suffer in silence. If you’re having trouble making your mortgage repayments, talk to us about refinancing your home loan to make it more manageable.
To discuss if now is the right time for you to refinance your mortgage, get in touch with us for a no-obligation chat. We’d love to talk you through your available options! Contact us