With Australia experiencing the lowest rates ever on the market, now is a fantastic time to consider refinancing your home loan. However, before making any serious financial decisions, it’s important to do your homework, examine the options and make a decision that is right for you and your personal circumstances. Let’s discuss the potential benefits and downsides of refinancing your home loan, and how the process works.

What is refinancing?

At its core, refinancing is an incredibly simple process. It refers to paying out your current home loan to obtain a new loan at a lower rate. You can refinance your home loan with your current provider, or opt for a new loan with a completely different financer depending on rates, repayment schedule or even other benefits that may be available.

There are three ways that you can apply for a new home loan. You can apply online with your current provider, visit in-branch lenders or enlist a mortgage broker to discuss your options. Regardless of the direction you choose, it’s always wise to gain expert advice before proceeding.

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There are many benefits of refinancing your home loan in today’s market. Here are some of the best reasons why refinancing could be the right choice for you.

Lower interest rates or reduced fees

Just because your rate was great ten years ago, doesn’t mean it’s the best you could receive today. By refinancing your home loan, you may be able to access lower fixed rates that allow you to save thousands over the course of your mortgage.

Increased borrowing power

If you’ve been paying off a mortgage for several years without penalties, you’ve built up a favourable credit history and likely some equity in your property. Lenders are usually willing to lend up to 80 percent of your home’s value, and you can put that money towards the things that matter.

Reduction in repayments

Depending on when you got your home loan, the repayment schedule may not fit your current lifestyle or financial situation as well as you would like. By refinancing, you can achieve a more favourable repayment cost or schedule to suit your life as it is now, not as it was ten years ago!

Consolidation of loans

Keeping track of a car loan, home loan and personal loan can be difficult. Refinancing your home loan allows you to consolidate your different loans into one place, so you can keep track of your repayments and schedule from one place.

Downsides of refinancing your home loan

Every silver lining has a cloud. By refinancing your home loan, you’re borrowing more money over the course of your loan, and therefore paying more interest. Other hidden costs of refinancing include break costs, discharge fees and valuation payments to determine how much you are able to borrow.

How do I know if refinancing is right for me?

Everyone’s situation is different, and it’s important to understand yours before making a big financial commitment. At BrokerCo, we match you with an experienced mortgage broker who can walk you through the process of refinancing your home loan and help you get the best deal. Our brokers understand that you are more than just a client – we listen to your situation, and choose an option that could save you thousands over the life of your mortgage.

If you want to learn more about how BrokerCo’s services can help you, contact us today!