Top Reasons Australians Should Consider Refinancing Their Home Loans

Unless something is causing some serious discomfort, most of us are stuck in our ways or in a comfort zone when it comes admin or finance related aspects and reluctant to act.

In the case of personal finance, most Australians prefer to stick with a current bank or lender, and face it, it is convenient to have all your accounts in one spot and manageable on your portal or mobile App. So, why consider refinancing…?!

Refinancing can offer several benefits depending on your financial situation and goals.

Some key advantages include:

Lower Interest Rates

If market rates have dropped, your credit score has improved, your property has increased in value over recent years, you may qualify for a lower rate as a result, reducing your monthly payments and overall interest paid over the life of the loan.

Reduced Monthly Payments

By extending the loan term or securing a lower interest rate, you can decrease your monthly payment, freeing up cash for other expenses.

Please bear in mind that by extending the loan term, you might benefit in short term cash flow windfalls but might end up paying more interest over the prolonged period of an extended period loan term.

Shorter Loan Term

If you refinance to a shorter-term loan (e.g., from a 30-year to a 15-year mortgage), you may pay off your debt faster and save on interest.

Cash-Out Refinance

If your home or property has gained equity, you can refinance for a higher loan amount and take out the difference in cash for home improvements, debt consolidation, or other financial needs. Equity cash out can be some of the cheapest forms of finance compared to e.g. personal loans.

Switching Loan Types

A further benefit might be for you to switch from a variable rate to a fixed-rate mortgage to secure a consistent payment or vice versa, depending on your financial strategy.

Debt Consolidation

Refinancing can be used to combine multiple debts into a single loan with a lower interest rate, making payments more manageable and saving on interest in the long run.

Removing Lender Mortgage Insurance (LMI)

If you initially put down less than 20% on a mortgage and are paying LMI, refinancing after your home value increases may allow you to eliminate this cost and the LVR (Loan-to-Value) ratio might have come down in the meantime.

After all, you need to do something different in order to expect a different outcome.

Would you like advice on whether refinancing makes sense for your specific situation?

Reach out today!

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