26 Oct Why You Should Refinance
Applying for a new loan to replace your existing loan is called refinancing.
Consumers are often advised to consider refinancing in order to obtain a better interest rate and payment term. Instead of throwing out the original mortgage and creating a new one, the current loan is initially paid off to give way to the second loan.
But why you should consider refinancing? Does it suit your current financial situation?
Before you had settled for your current home loan now, there’s a possibility that you worked out possible deals and offers to land on a mortgage that best suited your situation at a competitive rate.
As a Finance broker myself, I always advise my clients to review their home loan from time to time to check if, at a competitive rate, it stills meet their current needs with the features they desire. The mortgage industry is competitive as there are new types of loan packages that are constantly being offered. Having said that, your current loan may not be keeping pace.
Moreover, there are unforeseen circumstances in our lives, such as sudden unemployment or home emergencies that can make you want to review your mortgage and refinancing may just be the answer.
I have provided more reasons on why you should consider refinancing depending on your financial circumstance. If you have further questions, you can always send me an email. I’m happy to answer your queries 😊
The ultimate reason for refinancing is for you to take advantage of a better, more competitive interest rate or to secure a longer payment term. You can also refinance to access a home loan feature your current loan doesn’t provide.
Other reasons for choosing to refinance are:
- To facilitate home renovations
With mortgage rates at historic lows, it’s a good time to shop around for a better interest rate or perhaps a more flexible product. Cash-out refinancing to fund your home improvement projects. You can refinance your mortgage and pull cash out of your equity to pay for home improvements or upgrades. However, you have to consider all the advantages and disadvantages that come with it. Consult your local finance broker just to make sure.
- To consolidate existing debts
To manage one debt instead of having a number of debts, you can opt to refinance to consolidate all your debts. You can potentially save money by getting a lower interest rate to pay off debts with a high interest rate. Check with your broker the corresponding fees involved to make sure you’re not paying more.
- To get a better interest rate
This is the usual reason why I advise my clients to consider refinancing. Especially if they took out their home at a higher interest rate, they can literally potentially save money on their mortgage just by taking the time to fill out the necessary paperwork and gather the needed documents. As your finance broker, I will do all the legwork so don’t worry about the hassle. Think of the potential savings!
- To switch lenders
If you are dissatisfied with your current lender, they don’t provide adequate support to suit your lifestyle, or they have failed to meet your expectations, refinancing can be an option.
It’s always a wise move to take advantage of the low interest rate. However, consult your finance broker for a more comprehensive advice and see if refinancing is indeed suitable for your current financial needs.
Credit Representative (486927) is authorised under Australian Credit Licence 389328.
This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.