Tips on Why You Should Refinance Your Home Loan
If we were to ask you what your current interest rate is for your home loan, would you know the answer?
Many clients tend to focus only on the approval process of a home loan, letting it sit and then forgetting about it. This however, is a common mistake which many clients make, so we have put together some key tips that you should consider to get the best out of your home loan now and into the future.
Tip 1: Review Your Home Loan on an Annual Basis
Due to a rapidly changing mortgage market, a home loan should be reviewed every 12-18 months at least.
Whilst the interest rate and product you originally received may have been the lowest and best suited at the time, chances are that in 12-18 months, there will be lower interest rates and better offerings from a number of other lenders looking for new business.
Tip 2: Know the Best Interest Rates Available by Seeking Advice from a Mortgage Broker
There is a distinct difference between what lenders offer their existing customers compared to what they offer new business. The majority of the time, new business will always get the better deal.
For example, if you took out a loan for $500,000 for owner occupied purposes with principle and interest repayments 18-24 months ago, on average, your interest rate would have been 3.80%, whereas now you should be looking at a rate of 2.85% or less. For example, this reduced interest rate could save you around $3,000+ per annum in interest.
A mortgage broker can tell you which lenders are offering the best interest rates at the time and advise which lenders have refinancing offers. A current example is that NAB, St George and Westpac will reimburse you up to $4,000 if you choose to refinance your loan with them.
Tip 3: Consolidate Other Debts
Another reason to refinance your home loan is that you can take the opportunity to consolidate other debts you may have. Whether the debts may be credit cards, personal loans or car loans, where the interest rates are much higher, it makes sense to bundle the debts together under your home loan rates, if this is possible for you. This will allow for fewer monthly payments and you may even be eligible for a lower overall interest rate.
Tip 4: Consider the Costs Involved
One of the most important tips when refinancing your home loan, is to always consider the cost involved in doing so. Most lenders will charge a discharge fee, solicitors fees, break fees (if the loan is fixed), which can make the option of refinancing not commercially viable.
Our team of experienced mortgage brokers at Allan Hall Finance are ready to discuss all refinancing options with you and answer any questions you may have. Please do not hesitate to contact us, should you have any queries.