To refinance or not refinance, that is the question!
Refinancing is when you pay out your existing loan and replace it with a new one. It’s pretty straightforward and when done correctly can save you thousands of dollars over the life of your loan. But is right for you? Should you refinance? We have compiled a list of the Top 5 Reasons to consider refinancing:
1. Shorten the term of your loan
Interest rates are low, and as a result, repayments on a 20 year mortgage are not much more expensive than a 30 year mortgage. If you can make higher repayments, refinancing to a shorter loan term will see you pay your loan off quicker and save you thousands over the life of the loan. Follow this link for 5 ways to pay your home loan off years earlier with no additional repayments.
2. Lower your interest rate
Research mortgage providers to source a loan at a lower interest rate. By doing this you could drastically reduce your payments and save thousands of dollars in interest. Lowering your mortgage payment can also save you hundreds of dollars per month that could be saved or invested.
3. Change from a variable rate to a fixed rate loan
By changing your current variable mortgage rate to a fixed rate loan you can save on interest repayments should the interest rates rise again during the fixed period of the loan.
4. Unlock the equity in your home.
Take the opportunity refinancing your home loan offers to unlock the equity you have already accrued. This unlocked equity can be used to invest in a rental property or shares. This is called ‘gearing’. It also offers you the opportunity to renovate!
5. Consolidate debt
It might be worth consolidating your personal loans into your home loan so you can pay off your debt at the lower rate. High interest rates on personal and car loans can be crippling. By bundling them all together you can pay the debt off faster and potentially save thousands of dollars in interest payments, providing you maintain your current repayment levels.
When thinking about refinancing your mortgage, you also need to consider the fees (such as the break costs, settlement fee, loan establishment fee and the mortgage registration fee,) that are involved. Take time to weigh up the pros and cons of your unique situation and establish your goal. Do you want a shorter loan term? Lower repayments? Access to equity, or consolidating debt?
If you have any questions about refinancing, contact us for a free consultation. Focus Property Wealth are experienced and professional Mortgage Brokers and will help you find the best possible loan for your unique circumstances.
Complete the form above or call us today on (08) 6162 6577 or Click Here – we can help you make you property work for you!