Is It a Good Time to Refinance?
Reserve Bank of Australia (RBA) held its first meeting on March 2nd, 2021. During the meeting, it was announced that interest rates will continue to be maintained at a historically low rate of 0.1%, and home loan interests of major banks are extremely low now. For example, advertised on 18/03/2021, 2 Years Fixed Rates for NAB Choice Package – Owner Occupiers – Principal & Interest: 1.89%; Residential Investment: 2.29%. It seems to be a good time to do refinance.
Refinancing means changing your mortgage from a current financial company/bank to another one, paying off an existing loan and replacing it with a new one.
If you have already had your current home loan for a few years, it is likely that your financial situation has changed over the time and your current home loan may not be suitable to meet current financial situation, or flexible features.
Through refinancing, you may meet your finance requirements and shorten your loan terms and reduce your loan repayments. Therefore, you can make extra mortgage repayments and own your home sooner.
There are several reasons why you may want to refinance:
To obtain a lower interest rate, new features or add-ons such as flexible repayments, redraw facilities and loan splitting；
If you come to the end of a fixed rate term, it is a good time to see if you can get a better interest rate or a more flexible home loan;
- To shorten mortgage term;
- To convert from variable rate to a fixed rate mortgage, or vice versa;
- You may be looking to top up home equity to raise funds to deal with a financial emergency, purchase another investment property or for renovation or to consolidate debt.
Refinancing your home loan may also offer potential tax benefits should you refinance to access equity in your home and use those funds to invest in property, shares or other wealth-building opportunities.
Things to be considered
However, refinancing can be a great financial move if it reduces your mortgage payment, shortens the term of your loan, or helps you build equity more quickly. When used carefully, it can also be a valuable tool to bring debt under control. Before refinance, you need to consider the following:
- How long do I plan to continue to live in the house?
- How much money will I save by refinancing?
- Can the saving cover refinance cost: such as settlement fee, loan establishment fee, mortgage registration fee and exit loan discharge fees?
To help you to compare home loans with different banks, you can contact us. We will help you to check your refinance plan step by step to make it easier for you.