Have you ever considered refinancing your home loan? If you haven’t, it’s worth considering every few years. You might be able to save yourself plenty of money, especially with interest rates in Australia being at rock bottom.
For the first time in history, some lenders are offering home loans interest rates that start with a 1.
Here are our top 6 refinancing tips.
Tip 1 – Compare interest rates
Check the comparison rate of your current lender against other lenders. The comparison rate includes the cost of interest plus any loan fees. Find the lowest comparison rate you can.
Then you can use our refinance calculator to work out how much money you can save on your repayments at the lowest rate.
Tip 2 – Negotiate with your current lender
If your current lender isn’t offering the lowest deal, try to negotiate with them. Many lenders may be prepared to offer you a better deal rather than to lose your business.
Tip 3 – Check loan features
- Do you have existing loan features like an offset account or redraw facility?
- If so, do you make use of them?
- If not, could you use them?
It’s important to understand that loan features cost money. It’s important to use them so you get more benefits than they cost you to have.
Tip 4 – Work out your potential refinancing costs
There can be costs associated with refinancing, especially if you are switching between lenders. You might be up for discharge fees with your current lender and application fees with your new lender.
It’s important that the benefits of refinancing outweigh the costs.
Tip 5 – Check the refinancing loan term
Standard home loan terms in Australia are 25 or 30 years. If you’re refinancing, it’s important not to increase your loan term unless you need to. If you do, you’ll pay more interest overall, even though your regular repayments will drop.
For example, if you have 15 years left on your home loan and you refinance to 25 years, you will be making repayments for another 10 years.
Ideally, you should keep your repayments at the same level when you refinance. If you do and you refinance at a lower interest rate, you will pay off your loan faster.
Tip 6 – Talk to a broker
Of course, if all of the tips above sound like too much work, you can ask a mortgage broker for advice. They understand the Australian lending market and they know where the great deals are.
Best of all, brokers work for clients, not for lenders. They may be able to negotiate lower fees on your behalf as well as get you a low interest rate.
How we can help
If you’re looking to refinance your home or investment property loan, our licensed and experienced brokers at Wisebuy Investment Group can help. We can also help you with your refinance application.
We service a diverse range of clients in the popular Newcastle, Lake Macquarie and Maitland areas. Our brokers work with more than 60 lenders in the Australian market.
Contact us today for an obligation-free chat.