Many people think that once their mortgage is in place, there is little that can be done or perhaps it is too risky to make a change. In actual fact, with continued competition in the market, you can always negotiate with your lender or potentially refinance to a better deal as other lenders may offer you better terms. The benefits can be enormous. For instance, if you had a $500,000 mortgage and reduced the interest rate by just one percentage point, over 30 years you could save $100,000 in interest repayments. To put things in perspective, that’s enough for a deposit on your next investment property!
Here are 4 benefits of refinancing your mortgage:
- You can obtain a better interest rate and save money $$$
If you purchased your property a number of years ago and locked in a fixed-rate mortgage, then it is highly likely there are far better options available now given the continued changes in interest rates.
Or, if you’re currently on a variable rate, you could consider changing over to a low fixed rate.
Remember ,it is uncommon for your lender to come forward with a better offer for you, however a good broker can often help with identifying a better rate for you and save you interest.
- You can gain extra features such as off-set accounts
Many loans now come with extra features such as redraw, offset accounts, split loans or line of credit facilities. If your current loan doesn’t offer these benefits and you see a benefit for you to have them, then changing loans might be a good idea.
An offset account attached to your home loan home loan, can assist to reduce interest on your loans, reduce your costs and help to pay the loan down faster. Often savings years off of your loan term. Essentially, any funds deposited into this account, such as salary or savings, then offset's the loan balance so you pay less interest – whilst still letting you have easy access to your money. This can be a fantastic strategy to speed up the reduction of your loan
- You can access equity to buy new property or renovate your property
Renovating your property is a great way to increase the capital growth on your property.
Depending on your property value and current loan amount, you might be able to use the equity in your home to fund such the renovation. Maybe a new pool for summer? Equity is the difference between the market value of your property and the amount you still owe on the home. So it is worth checking the value of your home to see if you can access equity to undertake renovations.
- You can also access equity for a deposit on a new investment property
You can use the equity from your existing property, to use as deposit for a new investment property purchase or complete improvements to your current home. What you need to consider is whether the increase in capital growth on your property through renovations or purchasing another investment property outweighs the amount you owe on your loan, then it might be something to consider.
A better rate, extra features and the ability to access equity for renovations or new purchase deposits are just four of the reasons people look to refinance their home loan. Others refinance their loans to consolidate debts from credit cards, car loans or personal loans.
Regardless of your situation, we suggest clients review their their mortgage and investments on an annual basis. This way you can receive up to date advice and consider all options and fees ensuring you find yourself in a better financial position.
We offer a complimentary appointment, where we can review your mortgage. Please contact Mark on direct mobile 0400 632 420 or firstname.lastname@example.org to book your appointment