After a few months stuck at home, you've probably put a lot of time to good use.
As a homeowner with a mortgage, chances are you've heard of the term 'refinancing'. Refinancing involves reviewing your current mortgage, and potentially altering your loan and/or lender to better meet your current needs, wants, and circumstances.
Refinancing might be the last thing on your mind with everything that's happening, but here are five solid reasons why it should be first.
1. You can (most likely)
You might not even be aware you could do it. But since many home loans are refinanced with the intention to save money, the timing could be better than ever.
However while that sounds too good to be true, the decision made by your bank or lender will be based on your eligibility for refinancing. So, for a lot of Australians facing job loss or reduced hours, now may not be the best time. But if you have seen minimal impact financially from COVID-19, it's worth a look.
2. Lockdown the low rate
In 1989-1990, home loan interest rates hit an all-time high at 17% p.a. At the time of writing, the RBA interest rates are at the lowest they've been in 60 years!
There is no doubt that COVID-19 has delivered a serious financial blow to many homeowners, however, now could be the time to take advantage of the lowest rates in Australia's recorded history and start saving.
3. Help with cash flow
It is a pretty unpredictable time financially, and while a few months off expensive cocktails, fine dining out and new threads to show off have helped, there are always other ways to keep on track.
You may be able to consolidate your debts using the equity in your home, reducing your repayments and likely interest on credit cards or personal loans.
4. Make sure you're on the right loan for you
Is your current home loan the right fit for you? You could be on a variable loan and want to take advantage of a current low fixed rate - you can split your loan and have some variable and some fixed.
It may be time to make the move to a different home loan.
You may want to access different features or flexibilities of a loan that you currently can't, such as extra repayments without penalty or a 100% offset account linked to your home loan. Whatever your reason, it may be time to make the move to a different home loan.
5. You've never refinanced - or haven't in a long time
If you've had a home loan for a while and never refinanced now may be the right time to put some time into assessing your personal circumstances. The five reasons above are all worthy considerations, but the main one is just to make sure you're not being taken for a ride. It quite literally pays to look around.
Please be aware that you should always consider getting mortgage or financial advice first and be aware of the potential downsides. Talk to your broker for a full list of potential risks and rewards.