When was the last time you reviewed your current home loan rate and compared it to what is currently available on the market?
Traditionally, many borrowers would take the set and forget approach with their home loan, but people are now shopping around to ensure their loan still has a competitive interest rate which saves them money in the short term and allows them to pay it off much sooner.
Let’s face it, the thought of having to research the market and fill out all the paperwork in applying for a mortgage is enough to turn anyone off re-financing. It also allows you to access any equity in your home (always be careful not to take too much of this equity) and this equity can then be used to consolidate other debt, such as the car or credit cards or it can be used to finance a renovation of your home.
BUT re-financing doesn’t just apply to your home and it shouldn’t be feared, it should be embraced and here’s why. All the banks and financial institutions are constantly competing for your business which allows you to take full advantage of that to secure a better interest rate on your home. However, it will require research beforehand to ensure you are getting the best deal.
There are a number of myths that need to be dispelled regarding refinancing….
Myth #1: The Process Is Too Painful and Time-Consuming
Although refinancing will take some effort, it will not necessarily be a hassle. Many consumers are missing out on thousands of dollars of savings because of the misconception that refinancing is a long and laborious process. In fact, the process of refinancing is easier than ever. Compared to a purchase, a refinance requires fewer documents, and even those are more streamlined and easier for borrowers to complete. Usually, it takes less than 20 minutes to complete the necessary application and the entire process can be finalised within 2 to 3 weeks.
Myth #2: There are so many fees associated with refinancing that, by the end of the transaction, I haven’t really saved any money
Refinancing your loan may not be as costly as you think with exit fees being abolished by the government on all new loans established after the 1st of July 2011. Although there are certain third party fees that lenders can’t control (eg. valuation fees), consumers should ask their lender right up front about all of the fees they’ll be charged for refinancing. It pays to do your research and look for lenders offering no upfront fees or charges to make it worthwhile.
Myth #3: I don’t want to add years back to my loan
The new loan term created when you refinance is only on paper. You determine the actual length of the loan by how much you pay. If lowering your interest rate saves you $150 per month, add that money to your new payment. You will reduce your balance sooner and reach free and clear ownership faster than you would by keeping your current loan.
Before deciding whether refinancing is right for you, it is a good idea to speak with a home loan specialist. As always it depends on your current position and plans for the future.
If you would like to know more about how we can assist you to refinance your home loan contact Financial Scope Melbourne for an obligation free chat.
Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.
Clint Thomasson
Clint has over 14 years experience in Financial Services working with major corporates including NAB, AMP, ANZ, and AXA. With a passion for Mortgage Broking, coupled with his outstanding interpersonal skills, Clint’s drive is all about matching your needs with the right financial solution. Whilst many businesses offer Finance Broking services, the difference you’ll find with Clint is his ability to listen, engage, retain knowledge and accurately match your requirements. Not only that, but he’s also a very friendly and genuine person with a great work ethic – you’ll have full confidence that he will deliver in a timely and highly efficient manner, every time.
