Are you flushing money down the drain by putting off refinancing?by Wealth Architects / 11.07.2018
Every year thousands of Aussie families flush their hard earned dollars down the gurgler because they put off the simple act of refinancing their mortgage.
While there are no hard rules about refinancing, it makes financial sense to review the loan when your individual circumstances change.
For example, you may be growing your family, moving to a new location, or getting married.
There are also plenty of reasons that exist outside personal circumstances, including the major financial benefits it can offer, and we’ll run through some of these below.
Refinance to get a better rate
Refinancing does not always have to mean changing banks.
There are hundreds of circumstances in which borrowers refinance their loans to get a better rate from their bank.
The mortgage market is very competitive, and a deal signed two years ago may not be in your best interest today.
However, if your bank is not in a position to offer you a better rate, there are many lenders in the market who can get you a better deal.
Lock in a great rate
You may have seen the news recently that the RBA kept the official cash rate on hold at 1.5% for a record 21st meeting.
However it won’t stay that low forever!
In fact, half of Australia’s leading economists in Australia’s longest running survey – the BusinessDay Scope economic panel – believe the RBA will lift its cash rate by the end of the financial year.
With so many experts predicting interest rates to rise in the next 12 months, and some banks already increasing their interest rates, now could be a good time to lock in an interest rate on your home loan.
Refinancing helps to reduce the interest payable on the different loans you have, which can include credit card, car loans or personal loans.
It basically involves combining all the loans into a new mortgage, giving you one simple repayment to make each month instead of a bunch of them – which can lead to late fees if you forget one.
The best news? All your debts are charged at the home loan interest rate – which is usually much lower than a credit card rate!
Increase your investment
If you are looking at your investment options but are financially constrained, it’s time to consider refinancing your mortgage.
One reason to do so is to buy another property.
Refinancing in this circumstance makes a lot of sense because you could have enough equity in your property, which may enable you to make another house purchase.
Get in touch
If you’re feeling like it’s probably time you should refinance your home loan – due to any of the reasons above – then be sure to bring it up with us during our next chat.
We can assist with making the whole process quick, stress free and easy!