If this crazy year has taught us anything, it’s how life can change and chances are that since you got your home loan, interest rates have moved. Since you took out your mortgage, your life has probably changed a little too. Your income and expenses may have changed, and your financial goals could also be different.
With the Christmas holidays just around the corner, possibly bringing with them a little down time, now could be the perfect opportunity to review your finances and think about your goals.
Why should I refinance?
Refinancing is a chance to look at what’s out there and to check to see whether your current loan is still the right one for you. As the market and your circumstances change, the home loan that was right for you then, may no longer be one that suits you now. New products designed to attract borrowers are always being introduced. Reasons for refinancing include:
- You may be looking to save a bit of money
- You may want to consolidate your debt
- You may be looking to unlock some equity you’ve built up in your home
- Are you wanting to renovate? – you can use the equity in your home to undertake improvements and increase its value.
Whatever the reason, it’s a good idea to review your home loan on a regular basis.
Questions to ask yourself?
Fees and rates
- Obviously the first question to ask is could you be paying less?
- Has the official cash rate changed since your current loan settled?
- Has the rate your lender is charging you changed?
- What about the fees and charges?
You may want your mortgage to have different features to what it currently has. For example:
- Offset account – This is a separate account that lets you use the balance to offset the principal on which your interest is calculated. Simply having your pay packet deposited into this account can take time off your loan.
- Flexible payments – Paying some more money into the loan if you have it is a great way to shorten your loan and save more in the long run.
- Redraw – This lets you easily access any extra funds you’ve deposited into your loan.
- Flexible rates – You can choose the type of loan that could save you money when interest rates go down or protect you if they rise.
Things to consider when looking to refinance
- Has your income changed? Hopefully it’s gone up, but it may have dropped. Your bank balance could have changed significantly thanks to an investment, business interest or an inheritance.
- Has your relationship status changed? You may be planning on starting a family or maybe you or your partner have already made a change to working arrangements to look after a baby.
- Have your living expenses increased?
- Have you taken out other loans or credit cards?
- Has the value of your property changed since you took out your current loan?
All of these factors will influence your new borrowing potential.
At Seek Financial, we deal with lenders and evaluate loan rates and features every day, it’s what we do, and what we do well. We understand the current market and can offer a wealth of information and expertise for you to draw on. If you’re thinking about refinancing your home, please don’t hesitate to get in touch. We can chat about your current loan and circumstances and find out what your needs and goals are and how they may have changed since you took out your loan. We can then give you an accurate idea of your current costs; identify any potential savings from rates, fees or features; and re-evaluate your borrowing potential. From here we can then help find the loan for you.
We can start by sending you a short list of information we will need from you so that you can work on it during your break. As always, if there’s something that you don’t understand, please ask, we’re here to help.
The above information is general in nature. It has been prepared without taking into account your objectives, financial situation or needs.