Who knows what you'll be doing in 30 years time?
Your financial situation can change many times over the course of a 30 year home loan so, the loan you took out at the start might not be the best one for you now.
It makes sense to re-evaluate your finances from time to time to be sure your loan is meeting your needs and offers you the best deal for your circumstances. A two-yearly home loan health check with a professional broker could uncover a better interest rate or a loan with cheaper fees that is right for you.
Pro Mortgage Tip: Set a reminder in your diary to check that your loan is still the right deal for you every two years. - Tweet This!
The process of changing loans is called refinancing, and there are many reasons you might need to refinance over the life of your loan.
In this series of articles, we’ll look at the most common reasons people refinance their mortgage.
Today’s Top Reason: Refinancing to get a better interest rate.
You may have heard about a better interest rate being advertised than the one you currently pay, and it’s got you thinking “I’m paying too much.”
Chasing a lower or better interest rate is one of the most common reasons Australians refinance their mortgages. But, before you jump ship, make sure you calculate the fees and charges that could apply to switching loans. Exit charges and setup fees can add up to outweigh the benefit of signing up for the lower rate.
Customer retention is very important to lenders, so most have a department whose job it is to convince you to stay with them. They can offer discounts or waive fees to make your current deal more attractive. Your broker can help you assess your situation for free, and even call your current lender to ask for a rate discount on your behalf, which could save you incurring exit or setup fees altogether.
But it’s not just the financial cost you need to consider. You may lose access to key features of your loan, like free redraws, branch access, free additional repayments or a 100 per cent offset account. If those things are important to you, then you'll have to really weigh up whether it's worth refinancing. It can be helpful to make a list of your deal-breaker home loan features to communicate to your broker so that they can sift through the options and bring you only the best deals to consider.
So, as you can see, there are many reasons why you should and shouldn't refinance, and it's never as simple as just a better interest rate. But if you don't regularly shop around and check you're getting the best deal, then you could be leaving big money on the table that's better off in your pocket or paying off your house.
If you'd like help with assessing your personal and financial situation, as well as comparing the loans in the market to see if you're truly getting the right deal for you, then call Bob Malpass now on 0431 862 136, email [email protected] or send us a message via our website for a quick response.
Thanks for reading,