REFINANCING FOR A BETTER RATE
For many people who hear the term "home loan refinance", it rings alarm bells. For those who don't understand what it means, it conjures images of financial hardship and stress. This couldn't be further from the truth. Very simply, refinancing is when your home loan is transferred from one lender to another, and one of the most common reasons for you to refinance is to access a better interest rate.
For example, imagine that 4 or 5 years ago, you purchased your first home. Interest rates were higher then, you hadn't been in your current job for that long, and you only had a small deposit to purchase your home and you had to borrow the rest. The combination of these factors meant that out of about the 20 lenders or so that you considered, only 2 would give you a home loan. You didn't get a particularly good rate at the time because you had to borrow a large percentage of the purchase price, but all things considered, you were just happy to be able to buy and live in your first home.
Now, your personal situation has greatly improved. You've paid down a bit of the loan, and at the same time, your house value has risen 20%. You've been in the same job for 6 or 7 years, and you're getting paid far more than you were when you purchased the house. But for some reason, you're still paying the same interest rate on your loan, or even worse, the rate has risen slightly.
In this situation or one like it, you may benefit from refinancing your home loan. Given your improved financial situation, instead of being able to choose between 2 lenders, you can take the pick of the 20 that you originally considered. Given the increased equity in your home, most lenders would be happy to give you a better interest rate than if you had less equity.
Simply changing lenders can mean saving yourself tens of thousands of dollars over the life of the loan, and it's not uncommon that those refinancing from high-interest rates can save anywhere between $100/300/month in loan repayments. Refinancing with the help of an experienced broker is a simple process, and can help you pay down your home loan debt faster.
If you'd like to learn more about your refinancing options, contact us now.