Reap the Rewards of Refinancing



Are you dreaming of a tropical vacation but don’t have the spare change to fund your holiday? Did you know that refinancing your home loan to a more competitive rate could reduce the overall cost of your loan and potentially save you thousands over the life of your loan?


In recent months we have seen the Reserve Bank of Australia pass on two rate cuts driving the cash rate further down and into the record books. Banks are feeling the pressure to pass on these cuts but as we have seen not all banks are passing them on in full. Now is the time to be very diligent with your home loan to make sure you have the most competitive deal possible.


The mortgage market is continually changing, and chances are, refinancing could help you save with a lower interest rate or benefit from more flexible home loan features. In addition to this it is possible that your circumstances may have changed since you first took out a loan and you may need a home loan with different features or a structure that fits your new lifestyle.


Refinancing is also an opportunity to put home equity to good use, providing low-cost funds to renovate your home, invest in a rental property or any number of other worthwhile uses. When refinancing it is also always good to consider whether to consolidate any personal debt. Folding high rate debts like credit card balances into a lower rate home loan can substantially reduce interest costs. This lowers your total monthly repayments, freeing up cash to pay a bit extra off your home loan each month to save even more.


Now what does this have to do with having a tropical vacation you might ask? One thing is for sure you absolutely shouldn’t be taking a vacation from paying your home loan off.


For most it should be quite the opposite and we should be looking to keep our repayments up as high as possible to ensure we are benefiting the most from these low, low interest rates. It is here that we will begin to really reap the rewards as we will start to see our home loans paid off faster.


The extra repayments you make to your home loan will mean you pay less interest each month and will put you ahead of your repayment schedule. These payments that you are ahead by are itemised by the banks as “available redraw” which essentially means you can draw back these extra repayments. This is where the “holiday money” should be kept. Instead of taking out a credit card or personal loan, a great way to fund a holiday is to make extra repayments against your home loan, saving you interest and then redraw from here the funds needed for your holiday.


To have your home loan reviewed it is a great idea to get in touch with your mortgage broker so that they can help navigate the ever-changing mortgage market. There are several great deals to be had out there from low interest rates to banks providing cash rebates towards refinancing costs. The help of a mortgage professional will ensure that you are able to consider and review these different options all under one roof and they will take the hassle out of the refinancing process so all you have to worry about is which beach you will chose to kick back on with mojito in hand.




Matt Cunliffe

Owner / Multiple Franchise Manager

Mortage Choice

www.mortgagechoice.com.au/matt.cunliffe




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