How refinancing your home loan can benefit you
As you journey through life, your financial circumstances change and your home loan can benefit from a review.
Home loans are not the most exciting dinner table conversations. But saving money to spend on things you enjoy should be shouted from the rooftop. Refinancing your mortgage might seem like a daunting process, but a little pain, could result in a whole lot of gain.
Consolidating your debt
Consolidating debts saves you money, it’s that simple! By consolidating personal loans, credit card or car loans into your mortgage, not only allows you to manage one payment, but the interest rate will be better.
Accessing equity in your home
One of the main benefits of having equity in your home is that it allows you to borrow against that equity. This helps fund renovations, starting a business, investing, private school fees or holidays. Interest rates are the same as your home loan rate, therefore borrowing against the equity means you reap the rewards of payments you’ve already made.
Improved interest rates
Home loans are a competitive space and shopping around always yields benefits. Doing your homework will more than likely equal a cheaper rate. The smallest change in interest rates can save you considerably, for example the total interest payable on a loan of $300,000 over 30 years at 5.5% would be $195,278.86, if the rate dropped to 4.3%, the total interest payable would be $147,771.34, saving you $47,507.52 over the term of the loan – cha ching! Now isn’t that worth some investigating?
Paying your mortgage off faster
New home loans lenders are entering the market every day. By researching your options you could take advantage of new lenders, products, lower interest rates or fees. Your original financial position could have changed, resulting in increased monthly repayments. Whatever the situation, you benefit from shortening the life of your loan, meaning you will have more to spend on more pleasurable activities for you or your family.
Increase the term of your loan
On the other hand, if you aren’t in a position to pay off your mortgage faster, and are having problems meeting your current repayments, you can increase the term of your loan which reduces your monthly repayments. This could ease some of the financial burden on your current situation.
Fixed vs variable rates
Refinancing gives you the opportunity to change what’s wrong with your existing loan, making your mortgage work for you. Because you can’t predict interest rates, you need to rely on what’s right for you now.
Fixing your interest rate, gives you security – you can plan your finances as you’ll know exactly what your repayments are. Whereas a variable rate depends on changing market forces, affecting the amount of interest you pay. Although, variable rate loans offer greater flexibility which means you benefit from, making extra repayments or the ability to redraw money from those repayments.
All loans have fees, and by examining the fees in your current home loan you might be able to make some savings. By shopping around and comparing apples with apples, you might find a different loan that has fewer fees or other benefits.
Are you ready to start researching the best home loan option for you? You don’t have to run around, let your fingers do the walking; using realestateVIEW.com.au’s home loan quote generator, can significantly change your life in 4 easy steps. Generate personalised quotes, from a wide range of lenders and benefit from dealing directly with lenders, not brokers, hence getting the best deal.