Thinking of trading in your home loan for a newer model? Here are the main reasons people start searching for better home loans:
To save money
The main reason people explore other options on their current mortgage is to save money on interest. The aim of the game with refinancing is to maintain your repayments at their current rate but with a cheaper interest rate, so you can start making a dent in the principal and therefore reduce the lifespan of your loan.
Many people find that their current home loan doesn’t offer adequate features, such as a redraw facility or line of credit. Having these extra banking features attached to your home loan means that, if things change, you have access to funds to boost your cashflow.
Finance renovations or investment
You may wish to refinance for a higher amount than your current home loan and use the extra money to invest in property or stocks, pay for your child’s education or to renovate your current home to increase its value.
Many people find greater peace of mind, not to mention reduced interest payments, in rolling all of their outstanding debts into one. When credit cards, the mortgage and personal loans are all combined, repayments are easier to manage.
Your circumstances may have altered since you first took out your mortgage. What might have been the best home loan at the time might not be working to your best advantage now – particularly if your mortgage was negotiated before the mortgage industry exploded with highly competitive products.
Compare refinancing home loans:
So with all this in mind, is now a good time to refinance?
While the only person who will be able to answer this question definitively is you, there’s a good reason why now may be a good time to consider refinancing. Competition at the lower end of the market is fierce, and interest rates below 4% are not uncommon if you look at some of the smaller lenders.
If you initially took out your loan with a big bank on a high interest rate because you thought it was more secure, by now you may have realised this isn’t the case. Smaller lenders are not to be sniffed at, and the savings that can be made by switching could potentially be in the tens of thousands.
Also keep in mind that there’s no such thing as loyalty in the home loan game. Lenders often offer low interest rate deals to new customers, overlooking customers that have been with them for decades. Don’t be afraid to switch to get some of the bargains for yourself!