Why refinancing your home loan makes sense and saves dollars
It’s no secret that many Australian households are going through tough times against the backdrop of a global pandemic, challenging economic conditions and a rapidly rising housing market.
However, it’s not all doom and gloom - you can relieve some strain on your family budget by reducing the cost of monthly mortgage repayments and Aussies across the nation are jumping aboard this trend.
Aggressive competition among lenders and an all-time low RBA (Reserve Bank of Australia) cash rate of 0.1 per cent, following six rate cuts in three years, have all been strong drivers alongside record low interest rates.
According to the Australian Bureau of Statistics (ABS), refinanced home loans recorded an all-time high of $17.2 billion in July, a jump of 6 per cent compared to June and more than double the value of refinanced homes in July 2019.
Katherine Keenan, Head of Finance and Wealth at ABS, noted borrowers were taking advantage of the shift with the surge likely to continue as lockdowns due to COVID-19 put even more pressure on homeowners.
“Borrowers are seeking out lower interest rates, particularly for fixed-rate loans and cashback deals across a large number of major and non-major lenders,” she said.
The good news is homeowners are in a powerful position, with plenty of competition among lenders offering record-low home loan rates.
According to comparison website RateCity, the number of variable rates under 2 per cent on its database climbed from 28 to 46 in just two months.
This competition for your mortgage means homeowners can pick and choose the best loan, and even negotiate with their existing lender to get a better deal.
The ABS reports borrowers are also opting to lock in their interest rate, too, following news that lenders have begun to increase the rates on 3-5 year fixed-rate loans.
HOW TO REFINANCE THE RIGHT WAY:
One of the most common ways homeowners can get themselves a better deal is refinancing through their existing lender.
What many don’t know is that lenders won’t automatically gift wrap and hand you their cheapest rate.
Just as you have to negotiate with your phone or electricity provider for an updated plan, you need to ask your lender to cut your home loan rate.
If you’re not someone who is keen on negotiating, never fear, that’s where we come in.
We understand that refinancing isn’t a one-size-fits-all solution and we can help you get the best deal and put dollars back in your pocket, not the lender’s.
Turning to an expert for guidance can also help you analyse whether fixed-rate loans or cashback deals would suit your situation.
They may look appealing on the surface, but if you dig a little deeper, you may find that your position calls for a more considered approach.
We can help you work through the fine print, fees and limitations that might exist within these loan options to help you determine whether a fixed, variable or split loan is better suited to your needs.
Get in touch with us today to find out how we can help you save thousands of dollars in interest repayments on your mortgage.
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