Life changes, and so does your financial plan. There are many reasons why you might consider refinancing – perhaps you are looking to get lower rates, consolidate your debts or make a major purchase with your equity. Whatever your reason is, it is a good idea to step into the process armed with knowledge. If you’re looking to refinance to another loan, here are the things you should consider.
Why Refinance?
Refinancing can allow you to reconstruct your mortgage. Moving into a new plan can help you access lower interest rates and lower repayments, save money, lengthen or shorten your loan period, switch loan types from fixed to variable or vice versa, consolidate all your debts into one loan, and get access to your home equity.
Should You Refinance?
When it comes to refinancing, your decision shouldn’t be based solely on lower rates. Refinancing may or may not be a good move depending on a number of factors. Refinancing may be your solution if you find yourself in one or more of the following scenarios:
- Your current rate is no longer competitive considering the market rate.
- You are looking to consolidate debts from various sources.
- You are going to live in the property you’re purchasing for a while to maximise the cost savings.
- You want to unlock equity to fund on investment, home renovation or other large purchases.
- You have a satisfactory credit history or repayment record, making it more likely for you to get better rates for your new loan.
- You have a high remaining balance on your loan, or you intend to make redraws on your equity.
- Your current loan has low to no early exit fees, and the savings from the new loan outweigh the setup costs.
