Refinancing

You’ve secured a loan, scoured the market and purchased your dream home. You’re bound to that loan, lender and interest rate for life, right?

Wrong.

By refinancing your home loan, you get a clearer understanding of your financial situation. More importantly, it lowers your interest rate and can save you thousands of dollars each year.

In the competitive world of home loans, lenders are continually vying for your business. Often, they withhold their best deals to entice new customers.

Refinancing a loan you’ve had for a few years with a different lender gives you a great opportunity to secure a better deal.

Long-term, a lower interest rate will save you on the total cost of your loan. Additionally, refinancing can reduce your monthly repayments. The advantage? Extra cash you can use to make additional repayments to pay your loan off sooner.

The difference between the balance owing on your loan and the market value of your home is your home equity. By refinancing, you can unlock your home equity and use the funds towards other financial goals – booking the holiday of a lifetime, purchasing a new car, paying off your children’s education or renovating your home.

Debt consolidation is the process of combining multiple debts into one single low rate loan – such as your home loan.

Doing this can reduce the rate you pay across all your debts and give you valuable savings on repayments. The extra you save can then be used to pay your home loan off sooner.

The benefits you want from your loan are likely to change with your circumstances. For example, a first home owner may initially find generation of spare cash limited. However, as this changes, moving to an offset account can be a valuable way to use savings to reduce interest costs.

All loans have unique features that benefit you at different times. As new features become available it is valuable to consider refinancing to ensure you have the best deal.

Refinancing gives you opportunity to secure a competitive fixed rate. You’ll get more secure repayments, easing your budgeting.

On the other hand, if your fixed rate term is due to expire, refinancing could allow you to move to the flexibility of a variable rate home loan.