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The Reserve Bank of Australia (RBA) has increased the cash rate to 0.85%. With interest rates rising, it’s high time to review your home loans and consider refinancing your home loan.
Refinancing your home loan offers a lot of benefits for you and can help you achieve your long-term financial goals.
Here are some of the benefits of refinancing your home loan.
Lower monthly repayments
Mortgage rates may differ from lender to lender. Refinancing gives you a chance to find a lower interest rate or reduce your mortgage repayments. It also allows you to access new interest-saving home loan features to your mortgage, such as an offset account or redraw facility, thereby giving you an opportunity to save more on your loans.
Shorter loan terms
Through refinancing, you may reduce your loan term. Now, this might not totally sound like an advantage at first as it may mean higher loan repayments for you. But a shorter loan term might benefit you in the long run as it can save you money by paying off your home loan sooner and reducing your overall interest payable.
If you’re managing multiple loans and credit cards, refinancing allows you to consolidate your debt into your home loan. Bundling your debts into your home loan might increase your home loan repayments, but it pays off your other loans. And since interest rates on home loans may be lower than other types of loans, this gives you an opportunity to reduce your overall monthly repayments.
Free up equity for another property
Equity refers to the difference between the estimated value of your property and what you owe your lender. Through refinancing, you may free up the equity you have in your current home and use it as a deposit for another property such as an investment property or other assets. You can even use it to fund the cost of renovations or cash it out and spend it on a holiday with the family.
Find a better deal that suits you
We all have unique circumstances. This is why it’s important to look for the right home loan product that suits your circumstances and needs. Refinancing with a broker helps you find the right product that matches your current situation and needs and could eventually help you pay off your mortgage sooner.
Take advantage of bank cash backs
These days, banks are offering cash backs from $2,000 to $4,000. This is why the best time to refinance is now so you can take advantage of these cash backs and get more money back into your pockets.