Three rea­sons to re­fi­nance a home loan

Wangaratta Chronicle - North East Property Guide - - AGENTS CHOICE - Writ­ten by | in Fi­nance

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.

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