Do you need to refinance your home loan?
The number of people who refinance their home loans has increased steadily in recent decades. With interest rates at an all-time low and more competitive deals on offer, more customers are looking to refinance their home loan to secure:
>> A lower interest rate
>> Save money by lowering your loan payments
>> A more flexible home loan product offering redirection facilities and a clearing account
>> A reduction in the time of your mortgage loan
>> Access to the principal of their mortgage loan to allow them to renovate their house, buy a new car or even build a swimming pool
change in circumstances
Change is inevitable, and you may now find that your situation has changed to the extent that you are now considering refinancing, as a result of any of the following circumstances:
>> You may want to invest in another property
>> You have a new baby, or another baby is due
>> You may want to consolidate your credit card debt and personal loans, or
>> Your current interest rate is locked in above market value
It’s important to get an annual “financial health check” of your finances!
Regardless of your situation, it is always advisable to have an annual “financial health check” on your home loan and personal finances. Just as you would ask yourself some questions when you’re not feeling well, you should look at your finances in the same way and ask yourself the following questions to determine if your finances are in order:
>> Is your existing lender/credit provider meeting your needs?
>> Should you fix your home loan to create certainty around your monthly payments?
>> Would you prefer a “mix” of fixed and variable interest rates?
>> Does your current home loan product have all the features you need, such as renegotiation facilities and a clearing account?
>> Will you save money by refinancing?
>> What will be the impact of the costs involved in refinancing your home loan?
>> Will you now better manage your personal and household budget by refinancing?
So even if you don’t have any specific reason in mind, it’s always worth weighing your options from time to time. Consider taking a “Financial Health Check” of your personal finances and household budget. The “Financial Health Check” will at least allow you to determine if you have a legitimate reason to refinance and if the long-term savings outweigh the short-term costs.
Refinancing can be very beneficial to you if done correctly and for the right reasons. Remember to calculate if you will be better off switching to another lender/credit provider and if you will save money by switching.
Once you have determined that refinancing is right for your circumstances, you should seek the expert advice of a professionally qualified financial broker. The broker should have access to interest rate comparisons and should be able to show you the long-term savings and confirm whether these savings outweigh the short-term costs.
So, don’t jump on the bandwagon and refinance your home loan. Consider its consequences and take the advice of an expert finance broker to make a profitable choice.
