Frequency of refinancing
In a rapidly changing mortgage market, a loan that was highly competitive back in the day, can quickly lose its lustre. In 2018 for instance, several lenders increased their home loan rates independent of any change in the Reserve Bank’s official cash rate and experts believe these out-of-cycle rate hikes will continue.
While these changes are happening, your bank isn’t about to let you know if a competitor has a lower rate, so you could be missing out on a better deal. Which means, there are sensible reasons to put your home loan under the spotlight at least once a year.
Best time to refinance
However, it’s not just about rates. Deciding on the right time to refinance your home loan will depend on your personal and financial situation. Over the course of 12 months, plenty can happen in your life, and your home loan needs may change in terms of what you need in features and flexibility.
Or, you may be aiming for new goals, like saving money by streamlining personal debt. Or perhaps you’re thinking about how you could use your home’s equity.
It all adds up to smart reasons why you should have your home loan reviewed once a year, and your Aussie Broker is well-placed to help. Not only is your Aussie Broker a home loan expert, who knows what’s happening in the mortgage market, they are also familiar (or will become familiar) with your circumstances.
When not to refinance
It’s possible that when you reach out to your broker for a home loan health check you’ll discover that now is not the right time to refinance. There may be several factors for this.
If you are on a fixed rate home loan you may need to think twice about refinancing, due to the costs incurred in a discharge fee and an early termination fee.
You might also find that the set-up costs of a new loan outweigh the savings. While discharging a variable rate home loan does not require you to pay any early termination fees, it might still carry exit and set up fees, including an application fee, settlement fee and more.
It is also important to consider if the new loan offers more than just a low rate. If the new product does not offer the features you need or the lender does not provide the service you would like, then now may not be the right time to refinance.
To be sure refinancing is the right move for you, your Aussie Broker can crunch the numbers. It all starts by setting a date for a home loan health check, then make it an annual event to stay on top of your home loan year by year.