2021 is proving to be a record time for refinancing home loans in Australia. The ongoing Covid-19 lockdowns, resulting in more time at home together, have given people the opportunity to think and talk about their finances, with historically low interest rates being cited as major contributing factors to this trend.
The Seek Financial team have put together a short list of things to consider when thinking about refinancing your home loan, together with a few additional points to take into consideration during 2021.
What does refinancing a home loan mean?
Refinancing your home loan means replacing your existing loan with a new one that is better aligned to your needs. This can often be with a new lender – lenders do not always reward loyalty, with better deals often offered to new customers rather than existing ones. We find the majority of people refinance their home loans to either get a better rate or to withdraw some home equity.
Reasons to consider refinancing
- Your home loan may no longer be suitable for your needs.
- Your interest rate may no longer be competitive.
- Your financial circumstances may have changed.
- You may not be happy with the service you have received.
- Your fees could be too high.
- You could reduce your monthly repayments.
- You could be paying for features you do not need and not have the features you want.
- You may want to unlock equity in your current home to renovate or purchase an investment property.
- Currently (September 2021), a range of lenders are offering refinance cashback incentives, some up to $3000. *
- Due to the high demand for property this year, we are in a seller’s market so you may now have more equity in your home. Having more equity in your home means that lenders can offer better interest rates and loan features.
- If you have a parent guarantor for your home loan, there is the potential to release the guarantor if your loan to value ratio (LVR) is now below 80%.
*It is important to consider all factors (fees associated with refinancing, interest rates, etc) when refinancing and not just assume that because you have a cashback deal, you’ll be better off. Lenders have eligibility requirements for refinance cashback offers and offers are generally for a limited time.
At Seek Financial, mortgages are our business – we do this every day. We are always up to date on all the latest offers and incentives that are available. A ‘home loan health check’ could save you thousands, your home loan features could be improved, and you could find yourself with a lower interest rate. In addition, a better payment structure could be introduced, making your repayments more manageable and you could consolidate any additional debt you may have. Please contact us today if you would like to arrange a time to chat. We’d love to help.
The above information is general in nature. It has been prepared without taking into account your objectives, financial situation or needs.