Top 4 Reasons to Refinance Your Loan
When you first take out a home loan chances are within a few years your situation & circumstances will have changed, & your original loan structures may not be the best option for you anymore.
This is where refinancing comes into play.
Refinancing is one way to ensure your home lending works with your current financial circumstances, & at the same time can support your longer-term goals.
Listed below are some of the common reasons people choose to refinance:
TAKE ADVANTAGE OF FAVOURABLE INTEREST RATES
Your interest rate determines the repayments required on your home loan. The higher the rate the less disposable income you have available to enjoy in other areas of your life.
As little as a 0.5% difference in your interest rate can end up saving you thousands in the long run.
Often a lender will offer you a very sharp interest rate as a new customer to lure you to do business with them. Then as time goes on & you move into the ‘existing customer zone’ the rates offered aren’t so appealing or competitive. Don’t be afraid to have your mortgage broker shop around for you if your current lender isn’t prepared to meet the market.
UNHAPPY WITH CURRENT LENDER
Sometimes we find our lenders service just isn’t what we expected, or their offerings no longer match our needs, leaving you feeling disappointed & dissatisfied. Things like poor customer service, inflexible repayment methods, inadequate services, or even ethical reason such as sponsorship choices or lenders investment, may result in you wanting to change providers.
If you do decide to refinance due to lender issues, make sure you consider ALL aspects of your new loan (your Broker will advise you on this) You don’t want to shift to only be worse off financially.
Refinancing to consolidate debt can be a smart option for many home owners. Generally home loan rates are less than other types of debt (credit card, personal loan etc.) It can also be a way to simplify your money management, & make budgeting that little bit easier. Having one repayment rather than multiple repayments each month is certainly a lot simpler.
Some lenders can be a little conservative when it comes to debt consolidation. While others have a greater risk appetite. If your current lender declines to consolidate your debt, it doesn’t necessarily mean all lenders will decline. Having an experienced broker on your side to advocate & negotiate for you is often the key here.
ACCESS YOUR EQUITY
Your equity is the portion of your home you actually own.
It’s calculated by taking the current loan value less your outstanding loan balance
EQUITY = CURRENT HOME VALUE – CURRENT LENDING
Accessing your home equity is done by increasing your current lending i.e. getting a loan top-up.
People often look to access their equity for such things as:
- Cover renovation costs
- Invest in a rental property
- Buy shares
- Start a business
- Buy a car
- Take a holiday
Whatever you reason to refinance your home loan it is always best to do your research – or better yet get your broker to do the research for you. Getting impartial expert advice, is the best way to ensure your home lending works with your current financial circumstances, & at the same time can support you & your families longer-term financial goals.
At Focus Financial we are committed to supporting your long-term financial wellbeing. So if after doing the research, we don’t believe refinancing is your best option, then we'll simply tell you so.
If you are considering refinancing reach out to one of the Focus team 0800 334 338