While the idea of going through all the paperwork to refinance your loan might seem daunting, the benefits of doing it will be totally worth it.
One of the main reasons it is such a great option is that refinancing essentially allows you to obtain a lower interest rate which will inevitably mean you could save a lot of money each month on interest repayments.
If you’re looking into potentially refinancing, here are five ways it could help you save money!
- The total interest you pay will be reduced.
Although this does depend on the conditions and terms of your loan, you can potentially end up paying thousands less in interest. It’s important to keep track of current interest rates and how the cost of the entire procedure will cost you. The benefits do tend to outweigh the negatives so if you’re thinking about it, contact your mortgage broker and talk about your options.
- Lower your repayments. This is obviously one of the best parts about refinancing! If interest rates and the market have significantly changed since you first purchased your home, you might be able to switch from fixed rate to variable or have the option to take out a loan that has fewer fees.
This is of course dependent on what rates were like at the time of purchase, so if you have only taken out the loan in the last 12 months you might find there isn’t much point refinancing just yet.
- Access the equity in your home. If you are looking at renovating or upgrading certain aspects of your home, then accessing the equity in your home will be a major part of why you would look to refinance. It allows you to access credit you have acquired through extra repayments, which is based on how much your loan is and percentage of repayments made. This is a great option for people looking for a cost effective way to refinance but is really only available for people who have made enough repayments to make the equity worth it.
- Potentially consolidate your debts.
If you have multiple debts accumulating in different places, banks or lenders then refinancing to consolidate your debt is a great way to save money on fees each month. By putting all your credit card or car loan debt onto the same loan as your home then you will immediately reduce the amount of fees you pay, it’s also a lot more efficient and will definitely save you time.
It’s important to remember though if all your loans are with different banks or lenders, then this process might be a little time consuming, but worth it in the end!
- Help you pay your loan off faster.
Ultimately paying off your home loan sooner than you expected is always a good thing. By doing something small like refinancing you will no doubt save money each month and have the potential to make extra repayments so you can pay it off sooner.
Making small extra lump sum payments regularly over the course of your loan period will improve your credit rating and help your wallet out in the long run. It’s definitely worth considering refinancing if your goal is to be debt free ASAP.
Whatever your reasoning for refinancing your home loan is, the benefits are undeniable.
Whether you want to access the equity in your home, benefit from lower interest rates or save some cash to make lump sum payments, refinancing is the way to go. If you are unsure about what step to take next don’t hesitate to call your mortgage broker and ask all the important questions you need answers to. Also, if you are looking at switching lenders or banks then speak to us about the best deal that is going to suit you and your financial situation.