1. You could save a lot of money with mortgage refinancing
The main reason to refinance your mortgage is that you work hard for your money and you should be careful not to throw your money away unnecessarily. Lending packages change all the time and the conditions such as interest rates may be much more favourable now, compared to when you took out your loan.
The smallest savings made cumulatively over time can result in huge differences in your finances. A suitable restructure of your loan can also lead to years of repayments coming off of your loan.
There are also simple changes you can make to your mortgage, like paying off your mortgage fortnightly instead of monthly, which save thousands of dollars over the course of a home loan.
2. Switching can be easier than you think, even in today’s finance climate.
Many people know they could save money with mortgage refinancing, but they may not know where to begin and it probably seems like too much effort. That’s a natural response because the world of finance can seem confusing and complex. It’s not so easy to keep track of what’s happening with your mortgage or even to work out if there’s a better model out there for you.
There is a bit of paperwork involved, but don’t despair, your broker can give you a hand with it. A mortgage broker is able to give you the rundown in layman’s terms so you’ll be able to understand what improvements and beneficial alterations can be made. After all, this is likely your largest expense on any ongoing basis. Finding out where you stand allows you to make a smart decision to select the right mortgage option for your needs.
There are many other options that you can talk to a broker about in relation to your mortgage.
3. You can take advantage of beneficial, new features
Refinancing your mortgage is not just about improving your financial situation – that’s just the start. You could take advantage of some really sweet new features that can create an effective strategy for your financial future, such as:
- better interest rates that might save you money,
- loan restructuring that can include the option for you to repay your loan faster,
- Fee free products,
- Debt consolidation,
- Releasing funds for renovations, etc.
There could be a host of features that would give you more power over your finances when you refinance your mortgage. At times, changes can be made without any increase to your normal payments. Seems too good to be true, but it is often the refinancing reality.
4. Maximise your savings by using an offset account
This is one of those features that sounds complex, but is actually really simple once you get the hang of it. You can pay less interest straight away without changing your interest rate!
An offset account is a transaction account that is linked to your home loan. Any money in the account is applied against your home loan. This ‘offsets’ the interest just like a repayment would.
For example, if you have a home loan of $430,000, and you have a balance of $30,000 in your offset account. You will only pay interest on the remaining $400,000 owing on your home loan, as the $30,000 in your offset account acts to reduce the balance of your mortgage. It also means you don’t pay tax on any savings you have.
Another benefit is that you do not have to tie up funds to benefit from saving on interest. Remember, reduced interest charges increase the rate that you can actually pay off your loan.
5. Use your home’s equity to fund your dreams
For example, you might be dreaming of renovating your home or putting in a new pool for the kids. Refinancing your mortgage can also release some of your home’s equity. Those funds can be used to do the work, rather than waiting and having to save up the funds needed for this, or any other ideas you have to improve your home and lifestyle.
The amount of equity you can get out depends on the value of your home and how much you have repaid on your mortgage. The new money available to you can fund your overseas holiday or buy a new car or any other items that you would love to add to your home. Therefore the advantage is that you might be able to save on cost compared to other types of loans for these purposes.
If you where able to upgrade your cocktail dress to the latest style each season (sometimes without any expense) then of course you would make the effort to have a look.
Mortgage refinancing is all about reviewing your needs, making sure you’re not paying more than you have to, and that you’ve got the most effective home loan product for your situation.
Have you got a dream that we can help you with? Whether you want to save money on your current mortgage, consolidate debts, access extra cash or get your first home loan, we can help.