Following on from the disruption caused by the coronavirus pandemic, the Reserve Bank of Australia has kept the cash rate at 0.10%, causing home loan interest rates to hit an all-time low. The bank does not anticipate lifting it anytime soon, and lenders have continued to push down their mortgage interest rates.
This is the best time to review your existing home loan. Is it still the best choice for your needs personally at this point in time? Look into refinancing your loan so that you can save money down the line by taking advantage of the low rates.
Refinancing: What Is It?
As the name suggests, refinancing is when you replace your existing home loan with something better. This is achieved either through finding an alternative lender or changing home loan products entirely. The advantages of refinancing when it comes to financial situations include:
- Adding better features more tailored to your situation
- Combining your existing personal debts such as credit cards, personal loans or car loans
- Getting a loan with a lower interest rate
- Having access to the equity in your home
- Reducing your mortgage repayments
Personal circumstances can, understandably, evolve and shift over time. Income can decline or rise, home renovations could happen and there's also the big possibility of a secondary property purchase. All of those are prime moments to update and reassess existing loans.
If a loan is simply forgotten about when it's set, paying more even when you don't have to can happen.
Your current bank may offer different pricing than competitors, which could lead you to pay higher costs and interest on your debt. You may be able to switch to a better financial institution to gain access to cheaper and more suitable loan options.
Mortgage Brokers Can Offer Great Assistance
Hiring a mortgage broker is practically a game changer when it comes to the overall refinancing process. Key ways they help include, but are not limited to:
Comparison and research of home loan products - Mortgage brokers provide a summary of the loans you are likely to receive that will cover your needs. The summary highlights important factors such as interest rates and features, among others.
Reviews of your mortgage so your needs can be determined - Prior to planning a move to another lender, mortgage brokers have to consider your current loan and any other needs you may have. They will review the details of your current loan and ensure that future planning takes into account how you’ll be able to afford expenses down the line.
Negotiations with your lender at present - Changing lenders is a big decision, and it can be a lengthy process to complete. However, you may want to consider contacting your current lender to see if they are willing to renegotiate your loan agreements to suit your needs. This is something a mortgage broker can definitely help you along. They can work with the bank to rework the terms and rates of your mortgage settlement without requiring you to switch lenders.
Since the COVID-19 pandemic shook up the world, Australian home interest rates are lower than ever. Refinancing is basically when an existing home loan gets switched out with something better. Having a mortgage broker will go a long way in helping the process along, such as reviewing the mortgage and negotiations with a lender among other things.
Need to refinance your mortgage? Drop Wealthy You a line today! We’re an alternative lending specialist aiming to simplify our clients’ home refinancing.