When it comes to home loans, many of us don’t think about whether or not we could benefit from switching loans. But, most financial experts recommend that all home loan holders should review their home loan at least once every two years.
Why? Well, this ensures that the home loan holder is getting the best home loan package for their financial and personal circumstances. Plus, circumstances can, and often do change. So a home loan that met your needs two years ago may not be meeting your needs today.
What are the Benefits of Refinancing?
You can reduce your interest rate – An interest rate reduction can make a big difference to your monthly repayment obligations. This, in turn, can make home ownership more affordable and give you extra money for expenses each month. Plus, over the term of your loan you can save thousands in interest.
You can gain access to additional home loan features – Home loans have grown and adapted to the market and client needs. This means that many home loans now come with features such as an offset account, redraw facility and a line of credit. For the home loan holder, this means greater flexibility and greater home loan management.
Offset Account – These accounts allow you to reduce the interest you pay over the term of your loan using your savings as an offset.
Redraw Facility – This facility is like a savings account, but the extra money paid into the account reduces the amount of interest you pay on your home loan. By making extra payments on your home loan you can then draw on these funds at a later date, if, and when you need extra money.
Line of Credit – This provides you with a credit facility that you can draw on for any purpose, when and where you wish. You are only charged interest on the amount that you use.
You can reduce your debt – If you’re an investor, then you can reduce your tax by restructuring your home loan. The most common uses are negative gearing, interest only loans and the use of depreciation schedules.
You can consolidate debt – By merging your credit card debt and personal loans into your home loan you can reduce monthly repayment obligations and the amount of interest repaid.
Overall, refinancing your home loan can reduce financial and emotional strain and pressure, which, for many home loan holders, then makes life more enjoyable and comfortable.