Mortgage broker insight: 5 reasons to refinance
LoanDolphin hand picks the very best brokers and lenders to ensure you receive the best possible offer when refinancing. Meet some of our top brokers below, as they share their insight into why it can make sense to refinance.
Vaughan Clark is an experienced broker and member of Mortgage and Finance Association of Australia (MFAA). He understands finance from a client’s perspective and the difficulties clients face when dealing with the various banks. Whether it is to help you purchase your first home, buy an investment property, refinance to get a better deal or simply purchase a new car, he will guide you through the whole process from start to finish.
Michael Ching is an Accredited Finance Broker with the Finance Brokers Association (FBAA) of Australia and a member of the Credit Ombudsman service (CIO). He’s worked in the commercial finance space for some of Australia’s largest Real Estate companies. Michael believes in building strong relationships with clients and fully understanding their needs upfront to work out the best possible financing outcome for them.
Gabriel Mikha is a leading broker with over 15 years’ experience in the financial industry including 5 years within the major banks. Gabriel shows customers what the banks won’t, helping them to cut through the banking jargon and simplify the choice in making big decisions
With interest rates at historic lows, there’s never been a better time to get a great home loan rate. The RBA has just left the cash rate on hold, so you may be able to get a better deal than your current lender is giving you. Vaughan Clark, Michael Ching and Gabriel Mikha look at the top 5 reasons to refinance.
Getting a better mortgage rate
Paying less interest is a key reason to switch. According to LoanDolphin research, two thirds of people who have a home loan don’t know what their interest rate is. “It’s the biggest household expense for many people but most don’t even know their mortgage rate,” Vaughan Clark says.
Michael Ching agrees it’s that getting a better deal that is the most compelling reason you should review your mortgage. “Not only could you save on interest, you could potentially save hundreds of dollars on ongoing bank fees and charges. A mortgage is not a set and forget product. If you are on a home loan with an interest rate that begins with a 4, you are probably paying too much.”
Paying off your mortgage sooner
With a better loan rate it’s possible to pay your mortgage off early. If you keep paying the same amount each month you’ll be building your equity more quickly, as less will be going on interest.
“By not refinancing, you are not doing yourself any justice,” observes Gabriel Mikha.
“That money saved could help in paying the mortgage sooner or contribute to a well-deserved holiday.
More features and flexibility
The structure of your loan can be important. Many homeowners have loans that don’t meet their personal requirements because the bank they have been dealing with doesn’t offer what they require. By switching banks, you could get more features and flexibility from your loan and lender.
“Refinancing to a lender who offers additional features and flexibility such as an offset account or a line of credit facility could save you a lot of money in the long term. Ask your broker to explain these benefits,” advised Michael Ching.
Renovate your home
It can make better financial sense to do up your existing home than to buy a new one, and equity release lets you do that. Vaughan Clarke crunches the numbers: “With the medium house price in Melbourne being $770,000, the stamp duty cost is $43K. Clients now prefer to spend this money plus a little more upgrading their existing property; $43K buys a lot of renovations.”
Michael Ching also reckons it can be a smart option. “If you are looking to get cash out, maybe for a renovation or further investments, or even for personal reasons, refinancing might give you that access to low cost funding. You can access part of your build up equity, as well as potentially get a better rate and superior product. It just might be a win-win-win situation.
Buy a second property
With tax structures such as negative gearing, it can make sense to buy a second property with the equity you’ve built in your first home. Refinancing allows you to release this equity and expand your property portfolio.
“Not only will you save money, however you could be shown how you are able to purchase a property by utilising your equity,” Gabriel Mikha notes.
Be on your way to a better financial position and lifestyle and start the bidding process to get the best home loan, and check out these 4 tips to save you thousands off your existing home loan.