Top 6 Situations When It Makes Sense to Refinance


Homeowners who wish to refinance their home loan usually fall into four main categories: refinancing for a shorter mortgage term, refinancing for a lower mortgage rate, refinancing for cash out, or refinancing for debt consolidation. You may have a particular goal or a combination of the four. 

If you can determine your reasons for refinancing, then it will help you guide an Australian mortgage lender who is more suited for the goals you wish to accomplish. Realizing the right time to refinance your home loan will be based on your personal and financial condition. 

A few of the reasons why borrowers refinance are as follows: 


  2. Refinancing to Minimize Mortgage Repayment Term 


One of the primary reasons to consider refinancing is to minimize your loan repayment term. Usually, borrowers consider this option if their income increases and they feel that they are eligible to handle increased monthly repayments. 

You must be practical about what you can afford. However, decreasing your loan term signifies that you will own your home sooner and pay less interest in the process.  


  2. Refinancing for More Suitable Loan Terms and Features 


Possibly you are no more the same person you were when you settled your mortgage initially. So, there is no reason why your mortgage should stay the same. The change in your needs and financial circumstances may compel you to update your loan to reflect this. 

You may have accumulated savings. So, opening an offset account can be an amazing option to decrease your home loan interest charges. Or maybe, you can plan on making a few additional repayments that you’d possibly like to utilize in the future. Also, consider opening a redraw facility. 


  2. Refinancing for Debt Consolidation 


Refinancing can make your life more comfortable if you’re juggling a wide range of various debts. Debt consolidation can be of immense help for the improvement of your money management by streamlining unsecured debts, such as personal loans, car loans, and credit cards under your home loan. 

In this manner, you can only make a single monthly debt repayment. Moreover, all your consolidated debt will be charged interest at your home loan’s rate. 


  2. Refinancing to Lessen Fees 


Presently, a lot of lenders offer zero-fee or low-fee home loans. Accordingly, if you look at your loan and find that you’re paying too many fees, then it is crucial time to consider a refinance. 


  2. Refinancing to Get Cash Out 


You may have accumulated some equity in your home. Refinancing can free up some money to accomplish a range of goals such as home improvements and renovations or even investing in a rental property. 


  2. Refinancing to Switch Lenders 


Possibly, a new lender may offer lower interest rates or access to better features. However, there are other reasons to consider switching lenders. 

Whenever you feel dissatisfied with the customer service your present lender provides, don’t feel scared to look elsewhere. Maybe, a new lender might offer an improved repayment system or additional support. 


Conclusion 


You need to keep in mind that a lack of fees may be accounted for through higher interest rates. That’s why the best mortgage brokers recommend doing the calculations properly and ensuring you’re getting a decent deal. 

 

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