RateCity
Refinancing Home Loans
Borrowers consider refinancing home loans for a number of reasons, such as when interest rates decrease, to borrow additional funds or if they can't meet their current repayments.
But how do you know when is it is the right time for refinancing home loans?
As a general rule of thumb, the right time to consider refinancing home loans is when the difference between the average variable interest rate onf the market and your current interest rate is close to 1 percent. However the key is that the average variable interest rate should be lower than your current rate.
For example, if the variable rate on your current home loan is 7.81 percent but the average variable rate is 6.99 percent then it could be a great opportunity to shop around to see what other lenders are offering and make the switch.
But before you do, below are some things that you need to take into consideration:
- Speak to your current lender and work out how much it will cost you to exit your loan. Also find out if the new loan requires any establishment and/or setup fees.
- Generally, if you break from your loan within the first few years you have a higher chance of being penalised more than what you would be if you had the loan for longer.
- Work out how much you could potentially save by comparing home loans online at RateCity as you might find better deals than what you are currently getting. The table below shows some of the best variable rate home loans on the market.
- Make sure you read the product disclosure statement (PDS) so that you are aware of all the fees and charges of your new loan before you sign.
