Five reasons to refinance
A home loan is possibly the biggest financial move you’ll ever make. It stands to reason that the mortgage has to be a perfect fit if you are going to wear it for a long time to come. If that’s not the case and it’s already pinching, too tight or downright aggravating, maybe it’s time to look around. The home loan market is crowded with excellent products and refinancing may be the option you are looking for.
There are any number of reasons to refinance. Here are five of the most popular.
1. Rates are too highA better interest rate means big savings. You can capitalise on those savings by freeing up your monthly mortgage repayment, or leaving it as is and eating into your mortgage so you pay it off a lot sooner.
2. Bad serviceDealing with your bank manager might not be quite as bad as dealing with Basil at Fawlty Towers but if it’s up there on the irritation scale you may want to change financial institutions and start afresh. New faces, new products, better online service - there’s a world of new loans and new lenders on RateCity.com.au so start shopping.
3. Switch to fixedHomeowners who currently have a variable rate mortgage can refinance into a fixed-rate mortgage so they don’t have to worry about rising mortgage costs after the loan resets. For some people, this is the only way to budget. For this reason, fixed mortgages are also popular with investors.
4. Consolidate debtIf you have other debts, such as a car loan or credit card debts, you may want to use the equity built up in your home to pay off all of those debts and so improve your cash flow. Alternatively, you can always roll your outstanding debts into your home loan and take advantage of the lower rate of interest.
5. Change of circumstancesSplitting up with a partner may mean a home has to be re-financed into one name. You may also decide to travel yet you still want to retain your property. By refinancing and extending the term of you loan, the repayments will be less, giving you more cash to go travelling with.
Refinancing to cash in on lower interest rates or the equity you have built up in your home can be very beneficial to your overall financial health. If you’re serious about refinancing, there’s no substitute for shopping around and comparing to see what you can really save. Before you act, check that you won’t be hit with any refinancing fees such as early termination or exit fees from your current lender.
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