Renovations, debt consolidation or fixed periods ending – there are many things that prompt people to refinance their home loan. Smart home owners, however, take a more proactive approach. Here’s what you need to know.
Refinancing happens when you make a change to your home loan – either by changing the terms, the interest rate or the lender. For most people who choose to refinance there’s a trigger – they’re having another child and need that fourth bedroom, or their fixed period’s come to an end and their home loan has gone onto the standard variable rate.
There’s no need to wait until you have to refinance, however – and the smart thing to do is look around and strike when the best deal’s available.
As well as being able to reduce your monthly payments, refinancing can give you access to a whole host of other benefits.
Here are the things you should consider.
When shouldn’t you refinance your home loan?
There are times when you probably shouldn’t refinance and it usually comes down to the costs associated with getting out of your current loan.
“Most lenders will offer attractive headline rates to people looking to refinance,” says Pratham Karkal, Head of Personal Banking Direct at Macquarie’s Banking and Financial Services Group. “But you shouldn’t get carried away with that.”
Make sure you look deeper and compare the real cost of the loan.?