When You Can Refinance Your Home Loan
Refinancing your home loan means changing your existing loan from existing lender to any bank or lender you choose. Refinancing is rewarding when a lender wants to increase the existing home loan Australia to withdraw some home equity or to get a better interest rate.
Most of the lenders offer better deals to attract potential borrowers rather than offering rewarding deals to existing ones. Consider refinancing your loan to another lender with a more competitive rate, when your lender hikes your loan’s rate, more than what was set by the Reserve Bank of Australia.
Note: Make sure to reassess your home loan every two to three years. Check the interest rates of different home loans and compare them to find which one is best for you.
Is there any right time to refinance?
It is worth the money to refinance even within the first year of your home-loan approval if you could reduce your interest rate by at least 2%. To increase the chances of refinancing, it is still advisable for you to only borrow 80% at maximum; many lenders allow you to borrow as much as 95% of your property’s value.
Are you making the decision of refinancing based purely on interest rates of home loan Australia? If so, then be careful. Before you go after a cheaper rate, consider the costs of switching a loan. There are many costs involved in refinancing such as exit fees, break costs, and LMIs. To cover these additional fees, you need to be prepared to shell out some cash.
Refinancing means going back to the beginning and you have to go through the whole loan application process again. Even more, there is no guarantee that you will get the approval of the loan easily. Not every time, refinancing is an easy way out. Your personal circumstances and financial goals will ultimately help you finalize the right timing to refinance.