When is it a good time to refinance?

Mortgage refinance application and calculator.

According to Choice Aggregation on average people look to review their home loan rate every 3 years. If you have approached your broker or bank and they aren’t giving you what you want, then is the right time to look at your options.

Everyone should keep an eye on what is in the market and compare it to their own mortgage. Just keep in mind the more equity you have the more likely the bank/lender will negotiate your home loan rate.  Every year you should speak to your broker about your home loan rate and get them to explain why they can’t get better!

Your current rate is no longer competitive and lower rates are available

With interest rates at record lows, there is a strong possibility that you can access a lower interest rate. However instead of relying on Google and your bank’s website, speak to your mortgage broker. We can guide you not only on the interest rate, but on the terms, fees and structures that will give you the most suitable result. Interest rates are important, but they’re not the only consideration.

Your property value has increased and you want to use your equity

According to Corelogic, housing values have risen at the fastest rate in seventeen years in February 2021. A combination of record low mortgage rates, improving economic conditions, government incentives and a shortage of houses for sale led to a surge of 2.1%.

Depending on your location and property style, chances are your property has increased in value over recent years – and you might want to access that equity to renovate or invest. Refinancing opens up opportunities that can move you closer to your financial goals.

Your financial situation has improved

If your financial circumstances have improved, you may want to look for a more flexible loan option that allows you to pay off the loan more quickly.

You have accumulated credit card and/or consumer debts

There are 13,799,900 credit cards in Australia as of September 2020, netting a national debt accruing interest of $21.2 billion. For many Australians, managing credit and debt through credit cards is a common element of their day-to-day money habits, while for others a few bad mistakes have resulted in a downward debt spiral

If your credit card or consumer debt has crept up, you may be investigating refinancing to reduce the interest you’re paying on the credit cards and to simplify your debt structure.

I often find doing these types of refinances the most rewarding. We start with the client’s budget (see the calculator on our website) and bank account set up (ie how many accounts they have and with which banks).

We then discuss banking options and interest rates and if the budget has us in a position to proceed.  Instead of just showing the cheapest rates (which is important, but is not the only consideration), we show the client how they can direct any extra funds towards the home loan balance to ensure they can stay on track and that consolidating their consumer debt into their home loan doesn’t set them back financially.. (See the extra repayment calculator)

Refinancing your mortgage can do more than just help you save cash in monthly repayments. If done with sufficient planning and preparation, refinancing can also help pave the way for a better financial future for you and your family.

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