Borrowers are refinancing more than ever before, with borrower refinancing of mortgages between lenders hitting an all time high of $17.2 billion in July (as reported by the Australian Bureau of Statistics).
But what’s the reasoning behind the 60% year over year increase?
The answer really depends on who you ask. From seeking out a lower interest rate to taking advantage of cashback deals and new home loan products, borrowers are actively switching lenders to find the best deal.
With Canstar listing over 200 interest rates below 2%, there’s never been a better time to think about switching as there are serious savings to be had.
Why should you think about refinancing?
Have you held your loan with the same lender for years? You’re not alone.
Whilst many Australians think that refinancing just isn’t worth the hassle, sticking with the same lender year after year could be costing you thousands of dollars over the life of your loan – if not more.
Take advantage of lower interest rates
Refinancing your loan for a lower interest rate could not only save you money, but also allow you to pay off your loan sooner.
A lower interest rate may mean your repayments are lower each month, giving you more money in your pocket or more money to increase your repayments – saving on total interest and repaying your mortgage faster.
With interest rates at a record low, lenders are competing for your business and there are some incredible interest rates on offer.
Find a loan that better suits your needs
Loans aren’t a one size fits all package.
Whilst interest rates are often what people look at first, there are a wide range of loan features available to suit your needs.
Want to pay off your loan as soon as possible? A loan with an offset transaction account or the ability to make extra repayments will help you save on home loan interest and pay your loan off sooner.
Dreaming of post COVID vacations? A loan with a rewards credit card may be a great option.
Thinking of renovating in the future? A loan that allows you to redraw extra repayments without fees may be a good option.
Luckily we’ll do all of the research for you to find a loan that best suits your needs.
You want to lock in your rate
Your current fixed rate term is coming to an end – what happens next?
For many home loans, the interest rate is immediately rolled over to a higher variable rate by default.
By waiting until after your fixed term to refinance, you may avoid paying a ‘break cost’ fee associated with leaving a fixed rate home loan, however, refinancing before that time may also be an option depending on your current rate.
It’s time to renovate
You love where you live, just not the home you’re living in. If you’re thinking of renovating your home, you may already have extra value in your property to use that you can use to renovate.
You want to consolidate debts
For many home owners, their mortgage isn’t their only debt. Personal loans, car loans and even credit cards can be added into your mortgage, simplifying your finances and saving you money.
Whilst every lender has different rules about consolidating debts, there are likely options to suit your needs.
You want to invest
You’ve bought your home and now you want to invest in other areas. Refinancing your loan to access the equity in your home could allow you to use those funds to invest in property, shares or other opportunities.
How to know what’s best for you
Refinancing can be tricky, but we take out all of the hard work for you. Our team has access to a huge variety of loan offers from bank and non-bank lenders, allowing us to find the perfect loan for your needs.
What are you waiting for? Talk to us today and find out how much you can save.