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Five Compelling Arguments fo...

Five Compelling Arguments for Refinancing

While refinancing may be beneficial in many ways, it’s not always the easiest choice to make, especially in light of the recent market volatility that has affected us all.

Switching lenders through Home Loan Refinancing may help borrowers secure better interest rates.

Why Do Homeowners Refinance Their Home Loan?

Homeowners refinance their home loans for several reasons, including securing lower interest rates, accessing equity, consolidating debts or improving loan flexibility.

Refinancing can also allow borrowers to switch lenders, adjust loan terms or take advantage of better loan features that may not have been available when the original mortgage was taken out.

Because interest rates and financial circumstances change over time, reviewing mortgage options periodically can help ensure the loan structure remains suitable.

Many homeowners review Refinancing options to ensure their mortgage remains competitive.

1. Your present mortgage agreement are expiring or have expired

Therefore, you may be subject to, or already on, the Standard Variable Rate from your lender, which is often much higher than your original or fixed rate. Statistics from Experian show that over 1.5 million borrowers will be subject to their lender’s standard variable rate (SVR), which, depending on the size of your mortgage, may cost you thousands, if not tens of thousands, in additional interest.

2. Mortgage rates are rising

In the year and a half leading up to May of 2022, mortgage rates rose at their quickest rate in a decade. Since December 2021, the RBA base rate has been raised by a total of 1.25%, and more increases are widely anticipated this year. Lenders are regularly pulling the greatest offers, so it’s in your best interest to move quickly and lock in a fixed rate loan.

3. Enhanced flexibility and increased number of options

Since signing your mortgage contract, your financial circumstances might have changed, prompting you to consider making overpayments or perhaps switching to an interest-only or offset mortgage. Change to a mortgage plan that provides more leeway if you need or desire that kind of freedom.

4. Market and home price uncertainty

There is significant ambiguity as to whether home prices will decline over the next several years in certain areas of Australia, and the present view for the housing market is not very optimistic.

If you’re thinking to yourself, “Well, I’m not planning to relocate, therefore this does not affect me,” that’s OK. If you need to refinance soon but property values drop in the future, you may end up with a larger loan-to-value ratio and a more costly mortgage.

5. Capital raising on your property

Refinancing your mortgage may be a great way to get cash out of your house to make repairs or renovations that will increase its value, or to put towards the down payment on a second home or investment property.

Why Borrowers Review Their Mortgage Over Time

Mortgage markets change frequently due to shifts in interest rates, lending policies and economic conditions.

Borrowers who secured loans several years ago may find that more competitive interest rates or improved loan features are now available.

Reviewing loan options periodically can help borrowers ensure their mortgage continues to align with their financial goals and circumstances.

Some borrowers refinance to access additional funds through Equity Release.

How do you find success?

Major financial choices, like a refinance, should always be discussed with an impartial third party. We can assist you by analysing your situation and needs to determine the optimal course of action. If you’re interested in refinancing your mortgage, please contact us right away.

Borrowers considering refinancing may first estimate their eligibility using a Borrowing Power Calculator.