When you first got your home loan, it’s likely you spent time comparing your options to ensure you chose the right mortgage with a competitive interest rate to suit your needs at that time.
However, the mortgage market is highly competitive and always changing. The mortgage you chose originally might have been the ideal option for your financial situation then, but is it still meeting your needs today?
Everyone’s financial situations and goals change over time. You might find that your current mortgage no longer offers you the flexibility you want, or it might not provide the features you want to take advantage of. Perhaps your mortgage interest rate is no longer as competitive as it once was.
When things change, it can make good financial sense to consider refinancing your home loan over to a better option. Here are some of the more common reasons why people choose to refinance their mortgages.
#1: Reduce interest costs
Perhaps one of the more common reasons many people choose to refinance over to a different lender is to take advantage of lower interest costs. If your mortgage interest rate is no longer competitive, you could potentially save money by shopping around to find a better interest rate.
#2: Access different features
Not all home loans offer the same features or flexibility. For example, you might want to take advantage of a redraw facility or link an offset account to your mortgage or make extra repayments without penalty. If your old home loan doesn’t give you access to the flexible features you want, it might pay to think about refinancing over to a different loan type.
#3: Lock in a lower rate
If you’re concerned about the potential of rising interest rates in the near future, you might want to consider locking your mortgage into a fixed interest rate. A fixed rate home loan protects you against any future interest rate rises during the fixed term.
#4: Streamline debt management
It’s common for many homeowners to take advantage of the lower interest rate on a mortgage to streamline their finances. If you’re paying high interest rates on credit cards, personal loans or car loans, you might consider consolidating your debts into your mortgage. Not only do you have the potential to reduce your monthly repayments and free up your cash flow, but you only have one repayment each month to worry about instead of several, which could streamline your finances.
#5: Improve your cash flow
If your budget is always a little tight at the end of each month, refinancing your home loan could help improve your cash flow. Switching to a loan with a lower interest rate, consolidating other high-interest debts, and changing your loan term all offer the potential to reduce your monthly payments. If you’re paying less on debt repayments each month, you’ll have more of your salary left over to pay for other things.
#6: Unlock home equity
Over a period of time, most homeowners realise that they’ve reduced the amount they owe on their mortgage. At the same time, the value of their home has increased. The difference between the two amounts is the equity you’ve built up in your home. Refinancing your home loan lets you access that home equity to spend on other things.
#7: Complete renovations
Renovating your home can help improve its overall value. Some people might want to update older fixtures and fittings to give their home a modern feel. Others may need to add new bedrooms or bathrooms to cater for a growing family without having to move house. Refinancing your home loan can give you access to the funds you need to complete those renovations.
#8: Build wealth
If you’ve built up equity in your family home, you might be thinking about investing in a rental property to grow wealth for your future. Refinancing your existing home loan could unlock the equity you need to start investing in property.
#9: Achieve personal goals
Your home equity doesn’t necessarily have to be used only for investing. It’s possible to access some of the equity you’ve built to help you achieve personal goals too. You might want to take that dream holiday you’ve always wanted, or pay for the kids’ education or splurge on a new boat or caravan so you can enjoy your leisure time the way you want.
#10: Create financial freedom
Choosing the right home loan and other financial products could help you create the financial freedom you want. If your goal is to pay off your home loan faster and never have to worry about repayments again, you might refinance your mortgage to help you achieve your goal of financial freedom faster.
Are you ready to refinance your mortgage?
Your financial situation is unique to you. Your income and expenses aren’t the same as anyone else’s. You won’t have the exact same financial goals as anyone else and your reasons for refinancing are also unique.
No matter what your reasons for refinancing your home loan might be, the finance consultants at Assured can help you find the right mortgage at a competitive interest rate to suit your needs.
This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.
