Should I refinance my home loan now?
Is your home loan with one of the “big four” lenders including CBA, Westpac, NAB, and ANZ? If it is you are certainly not alone, as about 80% of mortgage holders are.
What a lot of people don’t realise that there are more than 60 lenders in the Australian marketplace and over 1,000 products to choose from which mean that more than likely there is a better deal out there for you.
Its particularly important to be having the conversation right now with a qualified mortgage broker as it’s been reported than close to 700,000 borrowers are on ultra-low fixed rates that will expire this year. After expiry, the loan will move to what is called a “revert” variable interest rate which is often higher than the rate for new customers with the same lender!
If you are not already doing this, you should be reviewing your home loan at least every 12 months. This is not to say that you should replace your loan to a new lender every year, but its to ensure that you are on track with your goals, to maximise your opportunities and to reduce your risk.
It’s much easier to review your home loan with a qualified mortgage professional who has the systems, processes, and tools in place to make it quick and easy.
Refinancing can be an excellent strategy to save money through a lower interest rate, consolidating any high interest (non-deductible) debt or tapping into equity for investment opportunities.
It does come at a cost though such as discharge fees, mortgage registration fees, application fees etc. Some of the fees are always charged and others aren’t. So, it’s important to do the maths on the savings vs the costs.
If refinancing works out to be beneficial, we encourage our clients to consider using their savings to make an extra repayment on their home loan as this will eliminate their loan faster. Check out our online calculator extra repayment calculator to see how many years you could save on your home loan and how much $$$ in interest.
Finally, I would like to warn you about the most common mistake people make when going at it alone without the assistance of a qualified mortgage professional. They fail to understand the true cost of the loan they are moving to meaning that they end up paying more than they expect, or worse, more than their current lender.
