05 Jun Why You Should Be Considering Refinancing
With interest rates sitting at the lowest level in Australian history, now might just be the best time to look at refinancing your home loan.
Thanks to the emergency measures put in place by the RBA, the official cash rate has been slashed to just 0.25 per cent. RBA Governor Phillip Lowe has made it know that interest rates will likely remain low for ‘a number of years’, meaning that borrowers should be looking to capitalising on this opportunity.
What refinancing means is effectively taking out a new home loan. In many cases, you are looking to find a new home loan that has a lower interest rate, that will lower your weekly or monthly repayments. However, these days there are a number of home loan products that allow you to save money in a variety of different ways. So the first thing you need to do is speak to a mortgage broker in Melbourne to understand what options you have.
Low Interest Rates
The most obvious reason to take out a new loan is to get a better deal. Most people stick with one lender for many years, but unfortunately, those people aren’t rewarded by their lender. In fact, it is often the very opposite.
Quite often those people who don’t refinance or at the very least review their loan will be paying a far higher rate of interest than they need to be.
When you speak to your mortgage broker in Melbourne, they will be able to point out that lenders put a lot of time and money into attracting new business. And it can come at the detriment of their existing customers.
A lot of the time, loans come with very enticing introductory rates for a set period of time, and by simply refinancing and choosing a different loan with a different lender, you can access some of these very attractive rates.
Better Loan Products
In our parents day, most people took out 30-year principal and interest loans and simply aimed to pay them off before they retired. Things have changed dramatically which is one reason you need a mortgage broker in Melbourne by your side.
These days, you can access products that can dramatically save the amount of interest you pay on your loan over its lifetime.
One of the products you should consider is a 100% offset account. An offset account is a transaction account that is linked to your mortgage. Any money that is sitting in your offset account, save you interest.
Used in conjunction with good money management you can take advantage of this sort of account to save thousands of dollars in interest.
Free Up Cash
When you speak to a mortgage broker in Melbourne, they can give you a range of options to suit your personal circumstances.
What has been made clear in recent times, is that having access to spare cash can be very handy. Either for an emergency or to potentially put down as a deposit on an investment.
By refinancing, you are able to access equity that has been built up as your current home or investment property has appreciated in value. Melbourne, in particular, has seen very strong growth in house prices over the last decade and anyone who purchased their home more than five yeast ago is likely sitting on some equity that they can potentially access.
For that reason, it’s well worth speaking to you mortgage broker in Melbourne about how you can refinance your current loan to access any equity you might have.
Finally, one of the most underrated reasons to refinance is to consolidate expensive high-interest debt.
People love to buy cars and pay for things with credit, but the issue is that the interest rates on these types of things are very high. That can weigh on your serviceability and adds to your monthly expenses.
By refinancing and rolling those loans into a cheaper type of loan, such as a home loan, you could be saving yourself thousands of dollars in the long run.
The first place to start when considering refinancing is always to speak to your mortgage broker in Melbourne. Please get in touch with us on 0488 814 148 to talk about your options for refinancing.