5 reasons to refinance your home loan

5 reasons to refinance your home loan
When you finally get a home loan, the last thing you want to do is go through more paperwork.
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However, there are many reasons property owners should consider refinancing their home loan.

From wanting a cosier home to responding to future changes in the official cash rate, it's worth keeping an eye out for these signs that it's time for a refinance.

1. You're dreaming of bigger things

Your first home can seem like the perfect fit, but as the years go by, there's always the chance that it no longer suits your needs.

The kitchen might seem cramped or outdated, you might need more bedrooms for a growing family or you've acquired some unfavourable neighbours that make you want to shift.

Whatever the reason, it's not unrealistic to dream of bigger and better things. A refinance may come in handy if you need to take out a larger loan to cover the cost of a new property.

Of course, you'll need to have a think about your finances. While the grass might be greener on the other side, you do need money to get there.

2. There's been a change in lenders' interest rates

If you keep track of the Reserve Bank of Australia’s official cash rate, you’re sure to have noticed that lenders change their interest rate all the time.

It’s a good idea to monitor your loan’s interest rate in comparison to the market - you could see significant savings just by refinancing your home loan.

If you're sitting on a variable rate loan, you might consider fixing your loan for a better sense of security. With a fixed rate loan, you'll know what your repayments will be for the period your mortgage is fixed for, whether it's for one year or three.

Hint: ALWAYS look at the comparison rate as it includes any additional or ongoing fees and reflects the true cost of the loan.

3. Your earnings have changed

You might have received a promotion at work or you might have reduced your hours. If your household income has taken a hit or risen significantly, you could certainly start considering refinancing.

If you're earning more, you might be able to afford to make additional repayments. By contrast, if you're earning less, you might wish to refinance your loan to decrease your mortgage payments and ease any financial stress.

4. You want faster results

The term of a home loan isn't with you your entire life, but it's a large portion of it.

If you want to get rid of your property debt faster, you can shorten the term of your loan, so you may want to refinance your loan to structure this.

Cutting your mortgage term from 25 to 20 years will require you to increase repayments, but you're also going to pay less in interest.

5. You want to change lenders

Perhaps your current lender just isn't working for you. Whether it's the loan being offered or the level of service you're receiving, it might make sense to refinance.

Some home loans are very limited, while others offer an extensive range of features. If you want an offset account or a line of credit, you might consider refinancing if this isn’t an option with your current lender.

If you’re considering refinancing, chat to one of our friendly lending specialists today.

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