Five things refinancers should know



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It may only seem like yesterday that you first took out your home loan, but if it was five years ago or more, then it’s possible it no longer meets your requirements. Whether there are new products out on the market or your circumstances have changed, there are lots of reasons to look into refinancing your home.

You may be motivated by a desire to free up cash, consolidate debts or enjoy the freedom of reduced mortgage repayments. Whatever you’re hoping to accomplish, refinancing can prove to be a sensible way to stay on top of your finances and get a better deal.

RateCity spoke to Craig Newham, Head of Marketing & Distribution, at Greater Bank, about five key things borrowers should consider when looking to refinance.

1. Timing

“Reviewing your home loan around once a year is best practice to ensure you’re still getting the best deal for your individual needs” – Craig Newham

Talk to your current lender about any new offerings they might have, but also do your research across the whole market to find out if there are any new features on offer since you last took out a loan.

2. Competitive rates

“Securing a competitive rate on your mortgage is one of the most important factors to keeping your home loan costs to a minimum,” says Newham. “As a guide, borrowers should look at what the majority of lenders are offering and compare it to their current interest rate. Unless you require a complex product, you should aim to be well under the market average.”

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3. Do your research

Switching lenders can be a big deal for some, but the more research you do, the more confident you’ll be that you’re making the right choice. Read all the terms and conditions carefully but also look into the lender and make sure they are equipped to look after your needs.

Newham says:

“If being able to meet with someone face-to-face is important to you, then pick an institution that can facilitate this with personalised service. You may also want to consider a customer-owned lender where the profits are reinvested back into the business.”

4. Your needs

New products appear on the market daily, so every time you do a health check on your home loan, there’s likely to be a range of new features up for consideration.

Newham says that a good place to start is to take stock of your financial goals:

“For example, if you are looking to save for a holiday you might benefit from an offset account. Alternatively, if you’re overriding priority is to pay off your loan faster, then a low interest rate and the ability to make extra repayments could work more in your favour.”

5. Repayment schedule

Find out how much a new home loan is likely to cost by using RateCity’s home loan calculator. It’ll ask you to enter a few details such as the amount outstanding on your loan and the interest rate you intend to pay before calculating how much your monthly repayments will be. When refinancing, be sure to factor in any discharge fees connected with your existing loan, and any upfront fees that the new lender will charge as they will both detract from the savings you stand to make from being on a lower interest rate.

This article is sponsored by Greater Bank. For more information on Greater Bank’s selection of home loans visit: www.greater.com.au/personal/home-loans

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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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