Australians switch their home loan everyday. While it can seem daunting, the rewards can be well worth the effort. Whether you’re looking to save money, access equity to buy an investment, consolidate debts or escape a lender you’re simply not happy with, and the fact is that your circumstances change over time, and your home loan needs to accommodate that. If you’re prepared to shop around, chances are you’ll find a better deal on your home loan, and there’s no need to speak to a broker to find it. Here are some common benefits of refinancing.
Get access to the extra cash you’ve been needing
Switching to a lower rate home loan could save you thousands in interest over the life of the loan. What it also could do is lower your monthly repayment. If you’re feeling like money is a bit tight at the moment, imagine how far an extra $50 a week could go. You may even find that your monthly repayment is relatively unchanged after including a top up for a home improvement and the savings on the new loan. With spring already here, this could mean you could install air conditioning or a pool for summer, a small extension, blinds, furniture or even solar panels. Compare loan amounts and repayments with Easy Street’s loan comparison calculator.
Give yourself more flexibility, but don’t pay for what you don’t need
Shop around for a lower rate on your home loan to reduce the amount of interest you pay over time. If you reduce your monthly repayment as a result, you could consider keeping your repayments at the higher amount or reducing the term. That way you could reduce the life of your loan considerably and own your home sooner. You may also be able to get access to features that help you pay off your home loan sooner, that are not currently available on your home loan. For example, an offset account, the ability to make extra repayments, more frequent repayment options or lower ongoing fees. Remember though, if you don’t think you’ll use the extra features, cut to a basic home loan which is typically cheaper. Easy Street offers a number of low rate home loans with flexible features.
Get rid of extra debts and save
If you have a credit card you can’t seem to get on top of, a personal loan, store credit or other type of personal finance, you’ll find that these repayments really add up. Over the course of an ordinary month, these really eat away at your spare cash and can make the difference in feeling like you’re falling behind or getting ahead with your finances. In many cases, the interest rate that you are paying on these debts would be much higher than the interest that you are paying on your home loan. Refinancing to a lower rate, and topping it up to pay out high interest debts, could mean that you save hundreds of dollars in loan repayments each month. Plus, you’ll only have the one repayment to stay on top of. While you’d now be paying these debts off over the life of the mortgage, the money saved can be used to pay extra off your home loan. Plus, only repaying the minimum amount on your credit card can mean it could take you just as long to pay it off.
It’s best to take the time and talk to a home loan specialist to see how refinancing could benefit your circumstances.
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