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Mortgage Refinancing Surges As Interest Rates Dive. Are You Missing Out By Not Refinancing?

JASON NAIRN, our finance and lending specialist explains the process of refinancing and explains how refinancing can help save you on your home loan.

0432 918 214

jason@linkedfinancial.com.au

First up, WHAT IS REFINANCING?

Refinancing is when you change your existing home loan to a new one. Sometimes this can be simply a new product offering with your current lender or switching to a new lender all together. Refinancing gives you the option to explore securing a better interest rate and the possibility of withdrawing on your home equity.

6 Reasons to Refinance Your Home Loan in 2021

Life’s always changing. Since you bought your home, your family structure, lifestyle or financial situation may be different. There might be another home loan that’s more suited to your life now – and offers you a better deal.

The two main reasons people look to refinance their home loans are either to get a better rate or to increase their existing loan to withdraw some home equity. You can refinance your home loan from any bank or lender you choose, and it doesn’t necessarily need to be your existing lender. These days banks do not reward loyalty, and in most cases we find lenders offer better deals to new customers rather than rewarding their existing ones.

Aside from this, what are some reasons for refinancing? It is going to come down to your personal situation, your short to medium term goals, and while people have a wide range of reasons here are the most common ones we see.

1You Want a Lower Interest Rate

Refinancing for a lower interest rate could not only save you money - it could also help you pay off your home loan sooner. It means your repayments might be lower every month, which means more money in your pocket. Or, if you use some of that saved money to continue making larger repayments, you might pay your mortgage off faster and save on total interest paid.

You hear a lot about interest rates and the RBA in the news, but every lender uses many different measures to set their rates. That’s why it’s important to speak to a mortgage broker to understand what rates you can access.

2You're Renovating

If you’re in Queensland particularly, you may have heard that the coronavirus pandemic hasn’t impacted house prices as originally feared.

In fact, many Queensland housing prices have increased.

If your property is one of the lucky ones to see an increase you may have more equity in your loan to borrow against. This could give you the opportunity to borrow some extra funds to do those renovations you’ve always wanted.

Lenders also like to give better interest rates to homes with increased equity.

3Your Fixed Rate on Your Loan has Expired

It is very common in Australia to have a fixed rate term of between 1 to 5 years. When your fixed rate finishes at the end of that 1 to 5 year period (or expires in bank talk) your loan will change back to a variable rate – and in most cases the bank’s standard variable rate which doesn’t have any discounts! You can avoid this by switching to another fixed rate, or looking at your refinance options to maximise your interest rate discount.

4You Want to Consolidate your Other Loans and Debts

Finally, refinancing gives you the chance to bundle all of your other loans together into a single debt under a smaller interest rate. This can be handy in situations where you have highinterest rate loans and debts like credit cards, personal loans or car loans.

A debt consolidation home loan Refinance works in a similar way to a cash-out refinance, where an increased portion of the loan can be used to pay out other loans and debts. Your old home loan will be replaced by a new one that includes the amount you used to pay out those other debts.

5Your Property has Increased in Value

Broadly speaking, property prices in Australia have increased over the past 5-7 years. If your property’s value has gotten a boost, you might be able to refinance and get a better rate. These days banks give better interest rates to borrowers with more equity.

6You Want to Invest

A cash-out refinance allows you to use the equity you have in your home to borrow money at a lower cost. You may want to invest these funds into shares, or use as a deposit of a new investment property.

Why Linked Financial Services As Your Mortgage Broker?

We are passionate about helping businesses and individuals achieve their financial and lifestyle goals. Our aim is to build long-term partnerships with our clients and assist them in building, protecting and managing their wealth and lifestyle for them and their families. We believe in the principles of hard work, integrity, honesty, loyalty, and dedication.

Our director, Jason Nairn has been in the financial services industry for over 14 years. He has extensive knowledge and experience within the industry.

Jason is all about looking at what is right for his clients, ensuring that their interests are the primary objective and that they are involved from initial stages right to the end.

Contact Linked Financial Services

Interest rates are at record lows right now, which makes it a good time to consider refinancing. Contact us to get started. Call our team of experts for a complimentary personalised assessment on your current situation. We’re more than happy to help you walk through your refinance options and find the right option for you.

This article offers general information only and does not take into account your personal objectives, financial situation or needs. Your full financial situation would need to be reviewed prior to acceptance of any product.