- Posted 04 Jan
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It’s the start of a New Year, which means it’s time to make changes and look for ways to save on your mortgage.
Now, more than ever, it’s important to watch bank interest rates and take note of what’s happening in the market to ensure you’re getting the best bang for your buck when it comes to your home loan.
If you do see that you’re paying more than you should be, refinancing could be a great option to replace your existing loan. But before you jump on the home loan refinancing ladder, there are some things you need to know before you make the final decision.
Refinancing Your Home Loan: What You Need to Know
Understand what you’re paying
It’s a widely reported fact that only one in three Australians actually know what their home loan rate is. [Source: RFi, Australian Mortgage Council]
Before you can make any decisions, you need to understand how much interest your paying on your home loan. A simple call to your lender will clear this up.
Check your current rate
It’s important that you fully understand the terms of your current loan, including the interest rate you’re currently locked in with. Since 2012, interest rates have dropped 2.25%, so if you’re home loan is older than 4 years, you are probably paying too much.
Again, a simple call to your lender to confirm your rate will help clear up any confusion you might have. Then you can see how your current rate compares to those that are available to you now. An online comparison site or chatting with your local mortgage broker is the best option for this.
Your home loan is something that you should be reviewing every 12 months, so if you haven’t done so in the past year, then now is the time to do it, particularly if you’ve got a variable rate. You’re well within your rights to ask your bank for a better rate if interest rates have dropped.
Changing lenders could be your best option
More than a quarter of consumers are not happy with their current lender, which means there is always room for improvement.
There are so many options to choose from when it comes to a home loan, that there is no reason for a lender to offer you a sub-par loan. If you are unhappy with your lender or the current terms of your loan, it might be time to consider a home loan refinance.
A new lender could be just what you need to kick off 2016 with a bang.
But be wary. Your lender isn’t allowed to charge you an exit fee for breaking your home loan, there could be other fees associated with your refinance, particularly if you home loan is on a fixed rate. Read and understand the terms of your loan before you making any changes.
Your mortgage broker will be able to assist you with any questions and also find you the best deal, no matter what fees you might be charged by your current lender.
When all else fails, keep it simple
If you’re short on time or are happy with your current lender, just not your home loan rate, then it might be easier and simpler to just have a chat with your current lender about what they can do for you.
A lot of lenders will be happy to chat with you about renegotiating the terms of your home loan, so if the thought of looking for a new home loan turns your stomach, keep it simple and chat with your current lender first.
If you’re looking to change your current home loan, refinancing could be a great option for your situation. Chat to one of our home loan consultants today and find out how we can help you.