Why, when and how to refinance your home loan
According to data from the 2016 Census, almost 35 per cent of Australians have a mortgage. That’s more than the number of people who own their homes outright and the number of people who rent, which both sit at around 30 per cent. However, despite the high number of Aussies making repayments on their home loan, many don’t realise that they could be getting a better deal.
That’s where refinancing a home loan comes in, and in this article, we’ll take a closer look at the whys, whens and hows of refinancing.
Why refinance a home loan?
There are all sorts of different reasons why you might want to refinance your home loan, but the most important ones are that you should be able to save money and pay off the borrowed amount in a shorter period of time. The key to this is being able to secure a lower interest rate, which in turn means your monthly repayments will be lower. After years of paying off your home loan, you’ll undoubtedly have a few ideas for the extra cash you’ll save, so whether you want to beef up your savings, take a well-earned holiday or even invest in another property, refinancing will give you the freedom to do so.
Alternatively, shortening your loan term will reduce the total interest you pay over the life of the mortgage and should allow you to own your home sooner. While this will mean an increase in monthly payment amounts, a reduced interest rate may mean this difference isn’t too much of a hurdle.
In addition to saving money, refinancing also makes it possible to change the type of loan you have. For example, moving to a fixed interest rate instead of a variable rate will protect you from any changes in the market, and now could be a particularly good time to do this with interest rates at record lows in Australia.
When and how should I refinance?
This is a common question, but the true answer is whenever you want! A great place to start is by doing your research. Find out what kind of home loan you have, what your interest rate is and how much longer you will need to pay it all off. Then, compare those numbers to what else is out there. You might be surprised by how much of a difference refinancing can make.
With the Reserve Bank of Australia currently keeping interest rates steady at a record low of 1.5 per cent, you may find that your home loan from a few years or even a decade ago is no longer anywhere near competitive.
So, how do you refinance your home loan with Beyond Bank? It’s simple:
- Make an appointment with one of our lending consultants, where you’ll discuss the refinancing options available. Be sure to bring along your bank statements, at least two payslips and your current council rates notice. Your consultant will then provide you with a quote for what your repayments would be after refinancing.
- Before refinancing can be confirmed, you’ll need to meet the criteria.
- If there are any discharge fees for your old loan, these will need to be paid before refinancing.
- Once all of the details have been sorted out, refinancing approval should take 48 hours. After this, it takes roughly four weeks for all the documentation to be completed and for your loan to switch.
If you’d like to know more about refinancing or want to make an appointment, get in touch with the Beyond Bank team today.