When considering refinancing – or “switching for a better deal”, it is important to ensure that you will be in a better position with the new loan. I will take time explain the costs and benefits of refinancing, to help ensure that it is worthwhile.
Pay off your mortgage faster!
If you’re striving to be mortgage free, there’s a good chance there may be a more appropriate product to meet your needs. Some mortgage products are designed to motivate borrowers to repay their mortgages quickly, so now is the perfect time to talk to your mortgage broker and consider whether a new loan will see you on the road to financial freedom – fast!
Better interest rates and lower repayments
Rates and mortgage deals are constantly on the move. To make the most of a competitive mortgage market, you might want to evaluate the loan product you currently have. For example, you may want to go for a lower variable-rate, or lock into a fixed-rate. Break costs can be expensive though, so you’ll need to check that you’ll come out ahead when all costs are considered.
Consolidate your debt
Consolidating your debts, such as credit cards or personal loans, into your home loan can save you thousands of dollars in interest charges. Rolling your debts into one monthly or fortnightly repayment can also help make juggling your finances a little easier, while improving your cash flow.
Avoid monthly fees and charges
Some lenders charge a monthly service fee – further adding to your debt. Competition between lenders has increased and some now waive administration fees, so refinancing your home loan with another provider can be a smart move to help cut your mortgage costs.
As you pay off your mortgage you’ll accumulate equity in your home. As long as you are capable of meeting your loan repayments, refinancing your mortgage can help you tap into the value that you’ve built up, using it for other purposes such as purchasing an investment property.