Is now a good time to review your mortgage?
With interest rates at historic lows and lenders seeking new customers, it’s a good opportunity to review your mortgage and consider refinancing. Even the Governor of the RBA, Philip Lowe, is encouraging Australians to make the most of these unusual times and search for a better rate.
Looking at the benefits of refinancing Refinancing can be a great decision for many reasons. However, before you start the process, it’s important to know why you want to refinance so that you can choose the right option for you. The low interest rates currently on offer mean you could be eligible for reduced repayments, or a shorter term for your mortgage. You could also consider switching from a variable to a fixed rate home loan, depending on what your lender is offering.
It’s important to consider what’s right for you Before taking the leap to refinance your mortgage, it’s sensible to think honestly about your finances more broadly. This year has been tough on many businesses, so it’s also important to consider how secure your employment situation is. Adjusting your mortgage may incur up-front costs, including things like lender’s mortgage insurance, and you may not feel the savings benefits of making the switch for years to come.
Once you’re sure refinancing is the best option for you, make sure you understand all your options. You can use a mortgage comparison site to calculate what the new interest rates will mean for your particular situation, and to compare any fees or charges associated with making the switch. It’s worth approaching your current lender to see if they can make you a better offer rather than immediately taking your business elsewhere. If you have a good credit rating and a decent amount of equity in your home, you will be in a stronger bargaining position.