Three reasons to refinance a home loan
The decision to refinance a home loan isn’t the most thrilling of tasks, but an important one that can save you thousands in the long-run. But what should you be looking out for when the time comes for that change? Here are three top reasons to bite the bullet, do the research and refinance a mortgage.
1. Small interest rate differences can add up to big savings
As lenders continue to increase rates out of cycle, unwitting borrowers are paying more to own their properties. Although increases of 0.15% seem small in isolation, a series of these small increases over time can make a big difference to the amount of interest you pay each year.
For example, if you’re currently paying 4.39% on a $500,000 home loan, moving to a rate of 3.89% will save you $2,500 in the first year alone. Savvy borrowers are generally brand indifferent and tend to move their loan to a different lender every few years to take advantage of special deals and introductory offers. Over the life of a loan, this basic strategy can deliver significant interest savings.
2. Lower refinance rates
In recent years, an increasing number of borrowers have sought to fix their home loan and take advantage of low home loan rates that are at an all-time low. By fixing a rate, a borrower is no longer exposed to interest rate increases during the term of the loan. With many lenders currently offering discounted fixed rates to attract new customers, now may be the perfect time to refinance and lock in a low rate.
3. Access equity in your property
If you bought a property years ago, you are probably one of the many Australians who has benefitted from the sharp increase in property values whilst paying down your home loan. Many are now choosing to access the equity they’ve accumulated in their home to renovate or place a deposit on an investment property.
If you’re accessing equity in a property and have decided to refinance a home loan, be sure to consider your refinancing options and secure a low interest rate. View recently launched View
Home Loans, which provides you personalised interest rate quotes from over 40 mortgage lenders in just minutes. Use this new and free service to access discounts and special offers from a wide variety of mortgage lenders, including the major banks.