When Should You Consider Refinancing Your Home Loan?

  • Posted 15 Feb

When Should You Consider Refinancing Your Home Loan?

Things are going great. Your job is secure, the kids’ education is all sorted and your home is comfortable and cosy, just how you like it.

You’re household budget has been tweaked within an inch of it’s life and you’re happy with your mortgage repayments. You’re able to easily meet all your obligations, so why would you even consider tweaking something as important as your home loan?

Because if you become complacent with your mortgage, you could cost yourself thousands in unnecessary interest payments.

Reviewing your mortgage should be a regular process, one that should involve checking the progress of your repayments and how competitive your current interest rate is.

If you don’t want to miss out on a better deal, consider the following strategies and determine when might be the best time for you to refinance your home loan…



#1: Review interest rates


Did you know that the Reserve Bank of Australia (RBA) meets once a month to chat about a variety of financial issues, with one of those being to discuss the official cash rate (OCR) which affects home loans. If they make a change to the OCR, there is often a flow-on effect to home loan interest rates, which tend to rise and fall based on these decisions.

Over the past 5 years, the OCR has had quite a dramatic change, going from 4.5% down to 2%.

If you’ve been paying your home loan off over a long period of time, and haven’t reviewed your current interest rate, now might be a great time to consider refinancing and locking in these low interest rates. It’s going to save you both time and money.



#2: Accessing your equity


While life might be going along nicely for you now, what happens when something pops up that you haven’t planned for?

Maybe you need to get a new car, take a much-needed holiday or undertake some unexpected renovations… whatever your circumstances, being able to access extra cash when you need it can often be a life saver.

To be able to access the equity in your home loan, you’ll need to consider your options. Refinancing your home loan is a good option, because it allows you to use the equity as collateral, and you can either use that to pay off extra on your home loan and reduce your monthly repayments, or access a lump sum to meet whatever financial issues you’re facing right now.

Chat to your mortgage broker before you do this, as they’ll be able to find the best deal to meet your specific needs.



#3: Consider debt consolidation


One of the smartest things you can do as a home owner is to consolidate all your debt into your home loan.

Why worry about juggling multiple debt repayments when you can consolidate it all into the one place?

Depending on your mortgage, you might be able to consolidate all your current debt, including your credit cards, so that you’re only making one monthly repayment.

By refinancing your home loan, you’ll be able to achieve this and look at the best features and rates available at the same time. This allows you to ensure you’re getting access to the best home loan for your specific needs.

Use a home loan calculator to work out your potential repayments once you’ve consolidated so that you’re aware of what you’re actually in for.

No matter what your situation, you should always be reviewing your home loan every 6-12 months. If you haven’t reviewing your home loan in a while, contact the team at Australian Credit and Finance today to chat about your home loan options.

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