When it comes to refinancing your home loan, it’s a case of reward vs risk. Let us step you through some of the most common questions and concerns.
Refinancing your home loan is the process of either extending or replacing an existing loan with your current financial institution or one of its competitors.
It can be a good option for people who feel they’re paying a lot in fees and interest, or for those who are looking for a new rate which could save them money.
For some, however, there can be an element of risk as it creates a new debt with associated interest rates and fees.
When should I consider refinancing?
It’s useful to run an annual home loan health check to see exactly how much you’re paying in interest and fees.
For a rough idea, you can use an online home loan calculator that compares your current situation to other products on the market. If you find a product which offers you a better rate with lower fees, it may well be worth refinancing your loan.
Refinancing may also be a good option if you’re looking to use the equity in your home to renovate, or if you’re coming to the end of a fixed term rate and you want to see if you can get a more flexible loan.
What should I take into account before refinancing?
While refinancing may give you a better interest rate and payment options, it’s also important to address any risks or issues that may counter those benefits. So make sure you calculate all the costs of the new loan.
Refinancing can also sometimes look like a great solution to your debt troubles. However, in the long term a loan with a lower interest rate may end up costing you more, particularly if it comes with high fees.
You should also consider any upfront costs associated with changing loans, including settlement fees, loan establishment fees, and exit fees and charges.
And remember: if it sounds too good to be true…
If you come across a refinancing deal that sounds too good to be true, it probably is.
Unfortunately, there’s the odd less-than-reputable person out there who will try and get you onto a deal while not properly explaining fees, charges and repayments before you sign up.
If you feel like you’ve been offered a deal with a hidden catch, come and have a chat with us and we’ll be happy to go over it with you.
Your next step
We understand that there’s a lot of different options out there, and searching through them all can be a little overwhelming.
Rest assured however that we’re here to help and will always give you information that’s in your best interest.
So if you’re tossing up whether or not to refinance your home loan, come in and have a chat. We’ll run you through your options for refinancing, and help you decide whether it’s the right course of action for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.