When was the last time you reviewed your home loan?
If it’s been a while, it’s likely that your needs have changed. With a new range of flexible features and competitive add-ons entering the home loan market, it may be worth thinking about refinancing to a new lender to take advantage of these benefits.
Read on to find out more about the benefits of refinancing your home loan…
1. It can be easier than you think
When you refinance, you’re essentially going through the same steps as you did when you first applied for a home loan. It can be easier the second time around as you tend to pick up some tips and tricks (as well as mistakes to avoid) along the way.
With refinancing, you’d look at your current financial situation, compare rates from various lenders, apply, get approved and then, prepare for settlement. This entire process could also be made easier by seeing a mortgage broker.
If you’re after a quick step-by-step guide on refinancing, check out our previous blogs here: How To Refinance Your Home Loan.
2. It could lower your monthly repayments and shorten the length of your mortgage
If your current financial situation has changed since taking out your home loan, refinancing may provide relief. By choosing an alternative lender that has a lower interest rate, you’re ultimately bringing your repayments down, paying less interest and taking a step closer to owning your own home. You may also want to consider looking for extra home loan features like an offset account, or free redraw to minimise your current fees and gain greater flexibility.
3. You can switch to a variable or fixed rate home loan
An added benefit of refinancing your home loan is having the option to go variable or fixed. With interest rates remaining at a record low , now may be the time to move to a lower variable rate if you’re currently on a fixed rate home loan. If, however you’re on the other side of the spectrum, you may choose to go for a fixed rate if you’re looking for repayments that won’t change.
4. You can unlock the equity in your home
If you’re thinking of making a big-ticket purchase – home renovation, holiday, car or paying urgent bills – refinancing your home loan may allow you to access some of the money you’ve already paid off on your existing home loan to fund it.
5. You could consolidate your debts into one manageable payment
If you’ve got a lot of debt in hand, refinancing it into your home loan can help you better manage your repayments. Home loan interest rates are generally lower than most interest rates charged on credit cards and personal loans, and by consolidating all your debts into one, you may even be able to reduce the total amount you’ll have to repay each month.
6. When you refinance, you’ll still be protected by our mortgage protection insurance
As part of our Loan Protection Plan, if you do decide to refinance and change lenders, we’ll still protect you. Unlike other bank products, we’re not tied to your home loan and will ensure you remain covered for the life of your policy.
There’s a world of benefits to be taken advantage of when it comes to refinancing your home loan. But like with everything, there are some risks to refinancing.
Make sure you take the time needed to understand the possible costs/fees associated with switching – your current loan provider may charge you an exit fee and your new provider may have some upfront application and valuation fees. Always speak to a professional like your local mortgage broker to help you make the best decision for what could be your biggest asset!
Loan Protection Plan is jointly issued by Hannover Life Re of Australasia Ltd ABN 37 062 395 484 (Death, Terminal Illness, Living and Accidental Injury Benefits) and QBE Insurance (Australia) Limited ABN 78 003 191 035 AFSL 239545 (Involuntary Unemployment Benefit). It is distributed by Australian Life Insurance Distribution Pty Ltd ABN 31 103 157 811 AFSG 226403 (ALI). ALI receives commission for each policy sold. Any advice provided is of a general nature only and does not take into consideration your personal objectives, financial situation or needs. You should consider the Product Disclosure Statement when deciding if this product is appropriate for you.