Finding a way to save money is just one of the many reasons you might be thinking about refinancing – perhaps you want to tap into the equity in your home or consolidate some debt. Here’s the rundown on why you might want to find another home loan.
Its simple mathematics - the lower the interest rate, the lower your repayments will be. Or you could keep your repayments the same and knock years off your loan - not to mention saving thousands of dollars in interest.
Keep in mind though there are costs involved with refinancing, so it’s important to balance these up against any savings you could make.
Perhaps you’d like to renovate, take an overseas trip or any number of personal goals you’d like to turn into reality by tapping into the equity in your home.
Equity is the difference between what your property’s current market value is and what you still owe on your home loan. Let’s say you have a home valued at $800,000 and have a mortgage balance of $440,000. If your new home loan lets you borrow up to 80% of your home’s value that means your useable equity will be $200,000.
Refinancing could be a great opportunity to roll any debts you have such as credit cards and personal loans into a home loan with a lower interest rate. Not only could you save on interest, you’ll also take the hassle out of having to manage several repayments.
However it’s important to realise that consolidating debt could give short-term debt a much longer lifespan, which would mean you’d end up paying more in interest over the long-term. If you want to take advantage of the savings you’ll need to make additional repayments to pay off the amount you consolidated as soon as possible.
There’s more to a home loan than just the interest rate. In fact, today’s loans come with a whole range of features that not only offer convenience but can help you save money as well.
Depending on the loan you choose you may be able to take advantage of:
As with all financial decisions, it’s important to weigh up any potential downside. Some things to look out for include:
Read the terms and conditions at bankofmelbourne.com.au before making a decision and consider if the product is right for you.
Any recommendation made in this article does not take your objectives, financial situation or needs into account. Read the terms and conditions before making a decision if the product is right for you.