All financial arrangements, ranging from a simple mobile phone contract to a more complex home loan, have elements in common: they should match your lifestyle and financial situation.
However, many people may not realise that financial contracts have ins and outs, meaning you may be able to switch products part way through your contract to find one that better suits your changing needs.
If a borrower’s financial and/or lifestyle situation has altered since taking out their home loan, they may find that refinancing to a new lender and/or loan offers a wide range of benefits, such as a lower interest rate, fewer fees and more beneficial features. It may help them to repay their loan or achieve other goals, sooner.
Spokesperson for Mortgage Choice, Australia’s largest independently-operated mortgage broker, Belinda Williamson said, “making the move may involve costs, such as exit fees for existing loans and/or application fees, lenders’ mortgage insurance, stamp duty, etc. for new loans. But in some cases the savings made from reviewing a loan and replacing it with one that better matches your needs now and in the near future can be significant.
Before delving deeper into changing your loan situation, consider the following checklist:
1) Have your financial/lifestyle circumstances changed since taking out the loan?
2) Are you looking for a ‘cheaper’ loan option?
3) Are you looking to repay your loan sooner?
4) Are you planning to have a family?
5) Are you planning to renovate your property?
6) Are you planning to downsize/upgrade your property?
7) Are you dissatisfied with the service provided by your current lender?
8) Are you considering purchasing an investment property/ies?
9) Are you considering consolidating debts?
If the answer to any of these questions is ‘yes’, refinancing your loan may be a worthwhile consideration.
“Borrowers who want to investigate their home loan options, and who may not have the time or know-how to research the market themselves, can call on a home loan expert,” Ms Williamson said.