By Fiona Erquiaga, Smooth Sailing Finance Consulting
INFLATION seems to be headed in the right direction, other countries have started cutting their interest rates and it seems that it is only a matter of time before Australia follows suit.
So, where does that leave homeowners in the Whitsundays wondering whether now is a good time to refinance or not?
Without a crystal ball, it’s hard to know exactly if and when the RBA will cut the cash rate, however, the decision as to whether to refinance depends largely on your individual situation and goals.
Refinancing may make sense if you fall under any of the following categories:
YOU’VE BEEN WITH THE SAME LENDER FOR A LONG TIME
Refinancing can be onerous, but it could be worth the effort.
If you’ve had the same home loan for several years, chances are you could be paying the ‘loyalty tax’, as many lenders offer the best deals for new clients, leaving loyal customers paying premiums.
You may be able to get a more suitable rate as a new client to another lender.
YOU’VE NEVER HEARD OF A REDRAW FACILITY OR OFFSET ACCOUNT
Certain loan features and tools may help you reduce your interest and get ahead, so it’s worth considering refinancing.
With a redraw facility, for example, you could make extra repayments on your mortgage and reduce your interest, but still access funds should you need them.
An offset account, on the other hand, allows you to deposit money into a transaction account that’s linked to your mortgage.
Deposited funds are offset against your loan balance, reducing your interest.
YOUR SITUATION HAS CHANGED
Have your financial circumstances changed since you took out your original home loan?
If so, all the more reason to consider refinancing to a home loan that marries with your current financial situation and long-term objectives.
YOUR DEBT IS FEELING UNMANAGEABLE
If you’re juggling multiple debts at once, such as a personal loan and credit card debt, it may be worthwhile considering debt consolidation.
With debt consolidation, you essentially roll all your debts into your home loan. It means you only have to make one repayment, making it easier to manage your debt.
It’s important to remember that you may end up paying more interest over the life of the loan, if you go down this road, so it is important to consider carefully.
YOU WANT TO ACCESS YOUR EQUITY
Want to make a big-ticket purchase, such as buying an investment property or doing a home renovation? Refinancing can help you achieve these kinds of goals.
Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product. Credit Representative 522752 is authorised under Australian Credit Licence 389328.
