When to Refinance your Home Loan

When you switch your home loan, with the same lender or to a new lender, you are refinancing. Generally, it is wise to review your home loan every 2 to 4 years to see if you have any chance to benefit from refinancing.

• When your financial situation is changing due to a change of job, relocation, change of family situation or other circumstances, the initial loan structure will more than likely not suit you anymore. So, it is the time to consider refinancing. By doing this, you may be able to improve your financial situation through a lower interest rate or bank administration fees, gaining useful financial features such as offset accounts or redraw facilities, which have not been included in your initial loan settings, or obtaining the equity from your property for future use.

• If you have several loans, for instance, personal loans, car loans and credit cards, from different lenders and with different rates and terms, it’s probably time to think about refinancing to simplify and consolidate all the debts with your home loan, and you are most likely to be surprised with the low rate that you get offered now compared to your previous ones.

• If you are thinking about renovating your home, adding a swimming pool or granny flat in the backyard, or buying an investment property, refinancing can help you to access the equity sitting in your existing property, hence reduce your new mortgage or increase your cash buffer for any unpredictable hardship in future.

To make the decision whether to refinance or not, you need also take into account the cost associated with exiting your existing home loan, and the upfront and ongoing charges from the new loan. Therefore, it is important to compare between different lenders and products and speak to your mortgage broker or accountant before refinancing.