Refinancing your home loan: Could it be right for you?

By the resi financial blog team, 15 January 2014

When should I refinance

Doing your research into the home loan market has a number of benefits that can help to make your repayment experience far more streamlined and reduce the amount of stress felt throughout.

After all, taking out a mortgage is a huge commitment for any Australian. Chances are you'll be making repayments for a long time and they will become a major point of consideration when it comes to making large financial decisions.

Luckily, there are a wide range of different options available that can aid your repayment efforts - making your home loan work for you in the long term. Furthermore, with the variable nature of the economy, there could be fluctuations that make your home loan easier to handle.

Home loan refinancing allows you to change certain aspects of your mortgage, making your financial commitments something to be involved in rather than passively paying off. Now could be the perfect time to consider looking into this for your home loan.

For example, the official cash rate is currently resting at the historically low level of 2.5 per cent. This has, in turn, resulted in a number of reduced interest rates for home loans and other credit-related products across the nation.

If you have a variable home loan package, it could be worth considering a home loan refinance to a fixed rate for a set period of time - usually between three and five years - in order to lock in the low interest rate.

This means you will retain a smaller interest repayment on your home loan repayments, even if the market begins to turn back up and interest rates increase in the coming months, which could make your overall home loan experience easier to cope with.

Aside from the savings that can be obtained through strategic refinancing, there are a number of other features that can be accessed and utilised alongside your home loan to help you achieve a range of goals.

Your home loan can become a great source of wealth and capital if you take the time to research your local market, the options available to you and the viability of these facilities in the grand scheme of your real estate plans.

Features like offset accounts, redraw facilities and lines of credit can make your home loan experience easier by offering interesting ways to manipulate and use your money for your benefit.

However, these are all more complicated than simply taking out a home loan and making diligent repayments. If you're interested in the options available to you, it could be worth getting in contact with a financial expert and discussing the mortgage avenues open to you.

Categories: Home Loans, Personal Finance