You may be considering to refinance your existing home loan in Brisbane. Or have heard people talking about it and wondering whether it would be a good idea for you. Like with many things regarding your finances there are great potential advantages and also possible negatives depending on your situation.
Benefits of refinancing:
Lower Interest Rate
If you are considering refinancing your home loan in Brisbane you may have had your loan for a while. Typically people look at refinancing three to four years into their loan. Whilst you may have got a great rate at the time, a lot can happen since you originally got your loan.
Lenders are always trying to grow their market share which results in a high competition for your loan. There is great opportunity to save big dollars simply by looking around. A 0.25% reduction on a $300,000 loan is $750 saved a year. Now calculate that over 30 years. We have specialist software that makes the arduous task of searching hundreds of loans very simple.
Access Your Equity
Typically property goes up over time so you may have equity available in your property that could be put to good use. Maybe that new bathroom or kitchen can finally happen which in turn could increase the value of your property. Alternatively you might be able to utilize the equity in your property to be able to access the deposit for an investment property without having to save for the deposit and further build your wealth.
Edgeview Mortgages is quickly able to give you an estimated value of your property in the current market and discuss how any plans you might have can be made a reality.
Restructure for Your Current Situation
As time passes, your situation changes. What worked great for you previously may not be right for you now. What worked great for you previously may not be right for you now.
Maybe you would like more certainty of payments so a fixed rate loan could be worthwhile or you would like to be able to access additional features not currently offered on your current loan such as offset, package benefits, redraw, portability and more.
Often we don’t realize just how much of our hard earning money is going towards personal loans that seemed like a good idea at the time.
You could very well be much better off rolling all of your smaller loans into your home loan in Brisbane which generally has a much lower rate.
Focusing those extra payments on your home loan to pay them off sooner, potentially putting you years ahead of payments. Just don’t go and get more personal loans or credit cards once you do, that defeats the point.
Lower Your Repayments
Another advantage that could benefit you is being able to extend the term of your home loan. And reduce the monthly repayments you must make, leaving you with more cash at the end of the month.
This could be suitable if you income has changed and there simply isn’t as much cash available to service the loan each month.
What to be aware of:
Whilst there are the benefits mentioned above, you should consider if they are the best for your situation.
• Refinancing your home loan can have hidden costs you didn’t expect:
If you are refinancing a loan that is fixed you may incur break costs which can be in the thousands. Be sure to confirm the exact break cost with your current lender before signing on the dotted line. Outgoing lenders will generally always charge discharge fees which can be up to $500 so need to be factored in.
• Is the interest rate reduction worth it?
Refinancing your home loan in Brisbane for the sake of a small fraction of a percent may not justify the costs of even doing so, be sure to look at the savings in dollar figures on an annual basis to get a good idea as well as any other benefits you are gaining.
• Make sure you are not worse off:
Interest rate is just one part of your loan. Not all loans have the same features and benefits. If you are using facilities such as offset accounts, package savings including credit cards make sure that by refinancing you are not forfeiting such benefits that leave you worse off.
• Lower repayments are not always the best:
Yes by extending your loan you can lower your monthly repayments now, but you will also be paying your loan for a longer period in future. Do you really want to be paying you loan off for the rest of your life by continually extending the term?