Why Should I Refinance My Home Loan?
Refinancing your home loan can be a smart financial move that could help you save money and achieve your financial goals sooner.
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With the uncertainty around interest rates and the lack of guidance and advice from lenders, now may be the perfect time to consider refinancing your home loan to a tailored, personalised service that puts your needs and goals ahead of self interests.
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Switch Lenders
Whenever you are looking to refinance, your first point of call should be to your current lender to see how they can help you. WHEN they don't meet your expectations, then you know it is time for a switch. Switching lenders can not only give you a better interest rate, it can also give you a better product that is more suited to your needs!
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Change Loan Terms
Refinancing your home loan gives you the opportunity to change your loan term. Typically, when you bought your home you would be on a 30 year loan term, however by refinancing you can change the term of your loan to suit your needs. We normally recommend keeping your current loan term at 30 years, this keeps your minimum monthly repayment consistent and affordable, however, using our tax and lending strategies we are able to teach you how you can pay off your home loan in the next 10 years!
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Accessing Equity
If you have been paying off your home loan for multiple years, chances are you have built up a bit of equity. By refinancing your home loan, you have the chance to access that equity - this is called a cash out refinance. It can be arranged as a split on your home loan if you decide to use it for another purpose such as a deposit on an investment property. Accessing your equity can also help you achieve other goals such as consolidating high interest debt or renovating your current family home.
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Changes In Circumstances
Unfortunately, in the lending industry not enough planning is undertaken when considering your lifestyle goals, such as starting a family - we aim to change this. When you are looking to start a family there has to be a discussion around the income your household is generating while your children are growing up. If you decide that one parent is going to be a stay at home parent then accessing additional equity before you start your family may be an option for you. This is imperative to create a buffer to ensure you are able to maintain your current lifestyle while you living off to one income.
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Reduce Monthly Repayments
A typical homeowners goal, when refinancing a home loan, is to reduce their monthly repayment. This tends to go hand in hand with refinancing to a lower interest rate however, you have to remember, the most important item when looking to refinance, if you want to pay off your home loan in the next 10 years, is the ability to make additional repayments and the ability to access them if needed!
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Lower Interest Rates
A common misconception in the lending industry is that a lower interest rate means that you automatically save money on your home loan over the life of the loan - this is not the case. Whenever you are comparing home loan products, it is vital that you have the ability to make additional repayments - and that you have access to them!
If you have a home loan that has a low interest rate however, you cannot make additional repayments, chances are that you will pay more back in interest over the life of the home loan than if you had a home loan product with a slightly higher interest rate with the ability to make additional repayments.
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This may sound strange but the main reason homeowners are able to pay their home loans off in 10 years, compared to 30 years, is the ability to make additional repayments!
During this time you will have additional equity in your home that may be available to you if you refinance.
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Talk to a specialist today to see how we can take you from where you are now to where you want to be!
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