If you have an existing home loan, your mortgage broker might have already dangled the idea of refinancing to you. In simple terms, refinancing involves taking out a new home loan in order to pay off an existing mortgage. But why would you do it? What benefits does it offer, other than the obvious?
People’s lives and personal situations change all the time. Refinancing your home loan could be the key to achieving your lifestyle goals. It offers a way to better manage your finances and take advantage of a lower interest rate.
Situations when you might consider refinancing
Although you might not have considered it before, there are certain situations when refinancing makes better sense:
- You want to make some home improvements or extend your current home.
- You plan on buying an investment property, or you’ve recently experienced a major life event such as having a new baby or change in financial situation.
- You are nearing the end of the fixed term rate for your current mortgage.
- You want to secure a better deal after reviewing different home loan products.
- You wish to simplify your finances through the consolidation of debts and monthly repayments.
Whatever your reason for wanting to refinance your home loan, you can expect to have some additional advantages.
Benefits of refinancing
Aside from the fact that refinancing can save you money, working with a reliable and trustworthy broker and making informed choices can help you reap the following benefits:
- Access equity in your home and build a new home or purchase investment property.
- Get a lower interest rate, as well as reduce monthly repayments.
- Reduce your total loan amount, get a more favourable loan term, and pay off your debts faster.
- Ensure you keep your home if you have arrears with your current mortgage.
- Get potential tax benefits.
- Consolidate high-interest debts (e.g. personal and car loans, ATO debts, credit cards) into a debt consolidation home loan.
Currently, homeowners have a short window of opportunity to refinance their home loan during the COVID-19 pandemic after the Reserve Bank of Australia slashed rates to help in preventing ‘a coronavirus-driven recession.’
If you’re having some trouble deciding whether you should go for refinancing, it may help to speak to one of our experienced mortgage brokers at Lend Perspective. Just get in touch with us or use our online contact form.
We’ll be glad to assist you with your financial needs.