Should I Refinance My Home Loan?

Should I Refinance My Home Loan

Refinancing a home loan might seem like a daunting task for many people. However, it could bring many benefits to you if you refinance a home loan. Knowing when to refinance your home loan may depend on various factors. To know what refinancing is and why you need to refinance, continue reading this blog.

What is Refinancing?

Refinance a home loan involves paying your existing loan with a new one. Home loan refinancing may shorten your loan term and minimise repayments. Thus, you can make additional mortgage repayments and get home ownership soon.

Why to Refinance a Home Loan?

Your circumstances might change or if your existing home loan doesn’t offer you additional features that are important to you, you might consider refinancing. The following are a few reasons why you may like to refinance your home loan:

  • Lower Interest Rate

You might like to access a lower interest rate. Refinancing for a reduced interest rate will not only save you money, but it can also help you pay your home loan sooner. It means your repayments might be reduced every month. Or, if you use your saved money for making larger repayments, you might be able to pay off your mortgage faster and save on the total interest paid. Every lender offers home loans for refinancing at different interest rates. That’s why it is crucial to speak to Star Homeloans in Australia to understand what rates you can access.

  • Shorten Loan Term

New life changes like a new job with a high salary might have put you in a better financial position than when you previously took the loan. In this scenario, you might want to refinance your home loan to pay the loan quickly and shorten the overall loan term. While your monthly payment may increase if the interest rate is lower, you could pay your loan with less interest over time.

  • Access Your Equity

Refinancing a home loan is a suitable option, if you want to access your home equity. Your equity is the part of your home that you own completely. The equity is the difference between your remaining home loan balance and your home’s current value. You can use home equity to make other purchases.

  • Debt Consolidation

Refinancing a home loan for debt consolidation is the best option for borrowers with other debts, such as car loans, personal loans, and credit cards. Debt consolidation includes merging other debts with your home loan. As a result, you can make one monthly repayment instead of making various repayments.

  • Extend or Reduce Your Home Loan Term

If your current home loan term doesn’t match your situation, you have the option to adjust it through refinancing. If your income has increased, you can consider shortening the loan term and making higher monthly repayments. This option helps you avoid fees for paying off the loan early, especially if you have a fixed-rate home loan. On the other hand, if you need to reduce your monthly repayments, you can refinance to a longer loan term. However, it’s important to note that choosing a longer loan term will lead to paying more throughout the loan.

  • Add or Remove Features

If your personal circumstances have changed, you might like to refinance your home loan. For instance, an offset account that you pay for in annual charges, but you notice that you don’t use it to take advantage. Or, if you feel like you need more features on your home loan, then refinancing would be the best option.

How often should you refinance your home loan?

It might be a good idea to review your home loan terms once a year, and your Start Homeloans brokers are ready to help you achieve your goals. However, it’s a good idea to monitor the market changes so you can benefit from home loan refinance. For instance, if interest rates reduce, you might want to refinance your home loan to take advantage of this. Moreover, if you are looking to buy your first home with only a 5% deposit, you might be eligible for a first home buyers grant in Melbourne or another state or territory. You can speak to us for more information about the first home buyers grant.

Conclusion

If you think that you should refinance your home loan for any reason, you can speak to one of the experienced brokers at Star Homeloans. We have helped many clients refinancing their home loans and locking the best deal.

Other Useful Links:

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Mortgage Broker in Bella Vista

 

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