While your current home loan may have been a perfect fit when you first received it, would you choose the same product now? Today, there is a large, diverse array of home loan products available in the market, not to mention the fact that both your particular financial circumstances and wider economic conditions may have shifted since that time. The loan you took out five years ago may no longer be the most suitable product for your needs and circumstances.
Perhaps it could be time for refinancing your home loan. ‘Refinancing’ simply refers to the process of replacing your existing home loan with a brand new one. You can do this with either the same lender as your last loan, or a different one.
At Future Financial, we have a wide range of mortgage products that could serve as a more suitable and advantageous alternative to your current loan.
Why would I get a mortgage refinance?
There are a number of reasons why refinancing your home loan could be a good idea. One is that the loan is simply not fulfilling your requirements anymore. Borrowers often have an annual ‘home loan health check’ to review the state of their existing mortgage – if the results come back less than good, it could be time for a mortgage refinance.
For example, you may have chosen a variable home loan when you originally took out your mortgage. But if interest rates have fallen dramatically recently, you might want to take advantage of this and lock in a particularly low interest rate that you have access to at the moment.
If there are other, newer products available on today’s competitive market, this could also be a cause for refinancing your home loan. For instance, while you may have gone with a standard mortgage originally, the allure of features like redraw facilities or offset accounts for other products is making you think twice about your original choice.
A mortgage refinance can also help you if you’ve had a shift in your financial circumstances – perhaps you’ve changed jobs or taken on a second source of income. Refinancing your home loan can provide you with a mortgage that better reflects your new conditions. This can be particularly important if you need to reduce your home loan costs – a mortgage refinance can give you a new, longer term for your home loan to take the pressure off.
Refinancing your home loan can also let you take advantage of your home equity in a number of ways. If you want to make a costly renovation to your home or perhaps purchase a second property for investment purposes, a mortgage refinance is the key.
What should I keep in mind when refinancing my home loan?
For one, before deciding that refinancing your home loan is the right choice, find out if there are any fees you will have to pay, and how much they are. If you’re switching from a fixed to a variable rate, for example, you could incur what’s known as a ‘break cost’ for ending the term early. And if you’re changing lenders, exit fees may apply if your home loan was taken out prior to July 1 2011.
Be sure, too, that you carry out a thorough comparison of the different loans available. Be certain that any additional features offered by a new product will be worth any the expense of these fees, along with any ongoing costs that may be involved.
Finally, be sure that you are refinancing your home loan for the right reasons. Refinancing is not a cure-all for all financial woes, nor does it tend to be a good idea if you’re not sure how much longer you will own the property.
If you want to find out if a mortgage refinance is right for you, sit down with the team at Future Financial. Our experienced staff can show you the different options at your fingertips.
Your Home Your Mortgage:
A Home Buyers Guide
Your Mortgage Your Options:
A Home Owners Guide To Refinancing
From the moment you turn the key in the lock and take those first few steps through your new front door, the feeling of owning your own home is second to none.
Your Home Your Mortgage aims to arm home buyers and investors with essential know-how and proven techniques to ensure you avoid the common pitfalls of financing a property.
There’s no question the current mortgage environment is one of the most competitive in our nation’s history.
Refinancing provides Australians with a platform to get a better deal on their current mortgage, many of which may have been locked in some years ago at interest rates well above what’s on offer in today’s competitive market.