If you’re a homeowner, you may have heard the term ‘refinancing’ before but are unsure exactly what it means. In simple terms, refinancing involves switching your current mortgage with a lender who can provide a better deal that meets your current financial situation better. This might be because you’re in a better position to pay finances, have changed jobs or added to the family, or are thinking about undertaking some renovations to your home. In today’s blog, we thought we’d take a look at the common reasons to refinance your home and how refinancing can save you thousands off your mortgage.
Why would you refinance your home?
Reasons to refinance your home #1: You’re not getting the best rate
Of the most common reasons we see homeowners choosing to refinance is to get a lower interest rate. Not only can this save you potentially thousands of dollars a year but can also mean you pay your mortgage off faster. If you find your cash flow is a little tight at the end of each month, switching to a better rate can help you live more comfortably.
Reasons to refinance your home #2: Switch to a variable rate or fixed rate
If your financial situation has changed, you may find yourself wanting the certainty that comes with a fixed rate or the potential money-saving benefits of a variable rate. At Oak Tree Finances, we often find clients switch to fixed rates when personal circumstances have changed (i.e., having a child) and need to know exactly how much they need to pay per month to factor into a budget. Or, at the end of a fixed rate term if a client finds themselves earning enough to pay more off their mortgage, they may switch to a variable rate for more repayment flexibility.
Reasons to refinance your home #3: You earn more and can pay more
If you’re locked into a contract that offers lower payments at a longer-term, you can end up paying a lot more in the process. Though refinancing to a shorter-term will have you paying more upfront, you can end up paying off your mortgage a lot quicker and saving yourself thousands of dollars along the way.
Why would you refinance your home #4: You want to pay your mortgage off quicker
If you originally locked in a long-term mortgage but find yourself in a better position and want to get out of debt quicker, there are plenty of favourable loan rates available. Many lenders will offer low-interest rates and even incentives such as cashbacks to earn your business, so it’s worth shopping around for the best deal. Chat to a mortgage broker Gold Coast homeowners trust and see how much you can save on your mortgage today.
Reasons for refinancing #5: Unlock home equity
If you’ve paid off a significant chunk of your mortgage, you may have built up a sizeable equity. This might also coincide with your home going up in value, which means you may be able to refinance and access that equity to buy another home or undertake renovations on an existing one.
Reasons for refinancing #6: Consolidate loans
If you have other loans or debts that need paying, you can consolidate them all into one loan. This could potentially reduce fees and make it easier to track payments and sort budgets. There’s also the added benefit of improving your credit score should you want to take out another loan, as it can be all too easy to miss repayments when you’ve got multiple loans to remember.
Think it might be time to refinance your loan?
Contact Oak Tree Finances today for the best home loans Gold Coast wide. Our brokers can offer home loan advice on which loans are best suited for your circumstances, and if a better deal is possible. Contact Oak Tree Finances today by calling 0404 403 066, emailing loans@oaktreefinances.com.au or by filling out an online form and one of our mortgage brokers will be in touch shortly.