You should book in for a regular
Mortgage Choice property loan health check to make sure you still have the one most suitable for your needs. Lifestyles change and so do property loan products! You could be missing out on a great deal.
Borrowers are becoming increasingly knowledgeable about the availability and benefits of using household equity to gain further assets or for debt consolidation, so refinancing continues to attract a large following as a market option.
The popularity of refinancing has been confirmed by the results of an Australian Bureau of Statistics report, showing approximately 25% of all property loans belong to consumers who have refinanced.
Reasons people use the equity in their properties to refinance can include:
- Pay off a property loan faster and save on interest.
- Consolidating debts. Buying an investment property, car or boat.
- Taking a holiday.
- Undertaking property improvements.
- Buying shares.
- Accessing funds for education; or
- Simply looking at a cheaper
property loan product.
The advantage of refinancing is to either obtain extra capital to invest in more assets, improve one's lifestyle through renovations or additions to an existing property, or to put all debts into one single loan — this can be paid off monthly usually at a lower rate of interest, and more importantly, provide peace of mind.
Despite the advantages of refinancing, there are many important factors to consider before deciding to refinance your current loan.
For example, switching loans may incur significant costs such as exit or break fees, application fees, loan stamp duty, registration fees, mortgage insurance and account fees. Your Mortgage Choice loan consultant will be able to advise an estimate of costs relevant to you and establish the benefits and savings of switching loans.
Some borrowers choose to stay with their original loan product. This could be due to costs associated with changing products or by changing loans they may be restricting themselves from other loan features (e.g. extra repayments, offset accounts and redraw facilities).
Either way, it is worth having a reputable mortgage broker such as Mortgage Choice conduct a free home loan health check to make sure you have the most suitable loan for your currentl financial situation and lifestyle.
Before you consider refinancing, it is recommended you talk to your mortgage choice loan consultant who can:
- Establish why you want to refinance.
- Confirm the following aspects ofyour existing loan: current interest rate paid and type of rate (variable or fixed), ongoing fees on the loan account, what features are currently available e.g. redraw, offset, lump sum reductions.
- Determine the costs of refinancing — it may be cheaper to keep the existing loan, rather than pay additional fees.
- Decide what aspects of the loan are most important, i.e. do you want the lowest rate loan no matter what? What features do you 'need' as opposed to 'want'?
- Consider options from all types of lenders — the most suitable option may be from a lender you are not familiar with.
- Future requirements — how flexible will the product be if you change your plans?
With the constantly changing market of lenders and products, together with individuals changing personal circumstances, it is recommended you undertake a Mortgage Choice property loan health check every one to three years and seek professional property loan advice before making the decision to refinance.
18-Sep-2007