For most of us, the monthly home loan payment makes up the majority of our cost of living. Often, a rise in the rate reduces our standard of living. So, let’s consider a few reasons why you might want to consider refinancing your home loan.
How many times have you heard friends talk about their home loan, and a rate lower than yours? The thing is, there are lots of factors involved beyond the percentage. The best suggestion is to just shop around. There is no harm in seeing what each lender is willing to bring to the table – including your current lender, who may be willing to entice you with a better deal so you stay with them. Just be wary of exit fees for getting out of your current loan.
You might also consider ‘auctioning’ your loan requirements on the lending market using online tools such as joust.com.au, and pit the financial institutions against each other to see what each is willing to offer you.
Switching home loans is your chance to add features you may have missed out on with your current lender. Things like an extra repayment facility, or an offset facility.
What’s more, to counteract the negative effects of rate rises, many financial institutions are coming up with ways to sweeten the deal – cash back, redraw facilities, zero annual fees – if you ask, you just might get.
Once you begin the process of refinancing your home, you might find it has increased in value since you bought it. Which means you may be able to unlock some equity to pay for renovations or improvements.
Of course, this will mean higher monthly repayments, but in relative terms (compared to other forms of borrowing), it’s still an affordable way to add that extension of the dream pool you’ve always wanted.
Despite all the home loan rate rises and the news from the RBA, your mortgage rate is almost guaranteed to be much lower than the interest paid on personal and credit card loans. So, refinancing could be a sensible way to combine all your other loans into a single, manageable and more affordable payment. But be warned, home loans are set over a much longer repayment period so you might find you pay more interest in the long run.
The one silver lining around the rising interest rates is that lenders know they now have to go above and beyond to attract your business.
So, when it comes to a lender, it’s important to pick one that has your interests top of mind. Whether that’s convenient access, competitive rates, great customer service or something else that makes you feel valued, don’t settle for second best.
Be sure to shop around and ask about incentives like a cashback offer that could sweeten the deal and cover your refinancing costs.
As always, if you have questions around any aspect of the home building process just get in touch. Connekt with our Sales Team at projects@connektup.com.au
