4 signs it may be time to refinance

The pandemic has drastically changed the way we live and work. For some, there may have been big changes to their financial situation.

You may have changed jobs or been promoted? Perhaps you’ve saved up some extra funds during lockdown, or you may be struggling to make ends meet?

Maybe your goals have shifted – you’re no longer saving to travel to Bhutan, but instead want to renovate your home to be that perfect retreat during lockdown.

Here are a few reasons why now is a good time to review your home loan.

1. You’ve been with the same lender forever

   Interest rates are at historic lows and competition between lenders is fierce. There are plenty of red-hot deals out there, so it’s important to shop around.

   If you’ve been with the same lender for years, chances are you’re probably missing out on a better deal elsewhere. If your interest rate isn’t close to 2%, call me today.

2. You have no idea what a redraw facility or offset account is

   Most home loans nowadays come with money-saving features like offset accounts and redraw facilities. These tools allow you to save in interest and potentially pay off your loan sooner.

   How they work

   Offset Accounts

   With this set-up, a transaction account is linked to your mortgage. Any money deposited is offset against your loan balance, reducing your interest payable.

   Example: you owe the bank $400,000 and you have $50,000 in the offset account. Interest will only be calculated on $350,000.

   Redraw facility

   With this loan feature, you can make extra repayments on your mortgage and potentially save on interest. On top of that, you can still access the funds in future should you need them.

3. Your personal circumstances have changed

   What’s changed since you took out your mortgage? Are you earning more money? Have your living expenses changed? Do you have different financial goals?

   All of these elements need to be taken into consideration when choosing the right home loan for your needs.

4. You’re drowning in debt payments

   If you’re struggling to cover multiple debt repayments, debt consolidation could be the answer. This strategy involves refinancing your mortgage and using some of your equity to pay off your debt.

The benefits are:

• Home loan interest rates are lower than other types of credit
• You’ll only have one repayment to meet
• You can spread the repayments out, so that they’re more affordable
• You may be able to make additional repayments and knock off your debt sooner.

While debt consolidation is not right for everyone (in some instances, you may end up paying more in interest over the course of the loan), it’s at least worth investigating.

Like to know more?

We’d be happy to review your home loan and check whether you’re getting the most competitive loan for your current financial situation and goals. Get in touch today!