Refinancing for a better rate – is it worth it?

I was speaking to a client the other day. She has been happy with her home lender and we were conducting a rate review. And while their rate was ok, it’s certainly not in the market. 

Should you refinance based on getting a better rate?

Yes and No would be the answer there, here are my top five things to think about when refinancing.

Is Lower Better?

Lowering your interest rate can reduce repayments, but if you keep paying the minimum, you aren’t really saving much particularly if your loan is taken back up to 30 years. Lower rates PLUS additional repayments are the best way to impact your loan – you can save YEARS!

Reduce your loan term!

Would you like to pay off your home loan in 20 years or 10 years? Well… you CAN!  Your lender will let you reduce the loan term, or if you prefer you can simply calculate what your repayments would be over that loan term and pay that. Check out our calculators to work it out!

Throw in everything you owe!

In The Happy Money Journey, we give you many ways of paying off your debt. If you have credit cards or personal loans along with a home loan, you can bundle them all together. However, you need to be mindful that you might end up paying more interest if you take more time to pay it off. 

Bells and whistles!

I recently spoke to a client who had $15,000 sitting in what she thought was redraw but the old discontinued product did not let her access the funds. She has refinanced simply to have a loan that lets her redraw her additional repayments. There are other bells and whistles such as offset, partial offset, and additional products that make a big difference in how you can use your loan to save you time and money. 

What are they offering?

The lender we chose gave that client a $2000 refinancing bonus!!! There are so many special offers out there. Refinancing bonus up to $5000 with some lenders depending on the loan amount.  There are also Qantas bonus points on offer which was a huge draw for another client we have.  Of course, as Mortgage Brokers, we look beyond the sparkly special offers to how the loan is suiting you.

If you would like to chat more call Elodie on 03 99982615 or email Elodie Blamey