Is it time to refinance while interest rates are falling?
With several recent rate cuts from the RBA and more predicted on the near horizon, many home owners are wondering if they’re paying too much on their current mortgage terms. Refinancing your home loan could potentially have significant financial advantages, but it depends on your circumstances.
Refinancing could be a case of staying with the same lender, but negotiating a better deal, or it may be an entirely new mortgage with a different lender. Either way, the objective is to take advantage of better loan terms where the savings outweigh any fees for breaking your existing mortgage.
Is the timing right?
With more RBA interest rate cuts predicted, you may be wondering if you should refinance now or wait until the rate cuts hopefully eventuate. But without a crystal ball, we never truly know when rates are at their lowest. Having a clear understanding of the options available to you is always wise. One option is to refinance to a better rate, while keeping enough flexibility to benefit from further rate cuts in the near future without having to refinance again. The truth is that the right timing depends on your individual circumstances. Speak to the friendly team at QE Loans on the Sunshine Coast to understand your home loan refinance options and make a well educated decision.
Are you currently on a variable rate home loan?
You may already be benefiting from the recent rate cuts, but in some circumstances you may have to opt-in to receive the cuts. Even if you are receiving the rate cuts, is your variable rate competitive? Sometimes renegotiating with your existing lender based on current circumstances, can achieve positive outcomes without requiring a full refinance. Other times, the lure of better rates and terms from another lender are too beneficial and a change of lender may be your best outcome. Speak to the team at QE Loans on the Sunshine Coast about the terms of your current mortgage for knowledgeable advice .
Are you currently on a fixed rate home loan?
If you’re already on a fixed rate mortgage, your repayments will stay the same until your fixed term ends, meaning you will not benefit during that period from lower interest rates in the market. You do have the option to break the terms of your mortgage, but this will come with fees. The question is: Are the break fees that you would incur less than the savings you would create by changing to a home loan with lower rates? The team at QE Loans on the Sunshine Coast can answer this for you and provide you with clear options, so you can make the right decision for your circumstances.
Refinancing to consolidate debts.
Sometimes the desire to refinance comes from a need to consolidate debts. There are pros and cons to consolidating debts. Often combining debts you pay less in the short term, making it easier to meet monthly repayments. The flip side is that sometimes debts which you consolidate into your mortgage are then paid off over a longer term, costing more in the long run. Everybody’s needs are unique and at QE Loans we’re committed to finding the right solution to suit your requirements
Some of the most common reasons that people refinance:
• To pay the mortgage off in a shorter term
• To make cash available for other priorities
• To relieve financial stress by reducing expenses
• To release equity and use for renovations or other expenses
• To capitalise on lower interest rates and save
Some of the key factors to consider with refinancing:
• Do you have enough equity in your home?
• What is the state of your credit history? (Note that there are solutions for good and bad credit history)
• What is the fee from your existing lender if you refinance?
Talk to QE Loans on the Sunshine Coast about all of the above and get knowledgeable advice on the right solution for your needs.
Is refinancing right for you?
In summary, everybody has different circumstances and there is no one size fits all solution when it comes to refinancing your home loan or the best timing. Any environment with changing interest rates will always create opportunities. Rather than just accepting your current mortgage terms and costs, at least evaluate your options to see if you can improve your financial situation. The team at QE Loans on the Sunshine Coast are always here to give knowledgeable advice with no obligations. Call Sami or Nicky for a chat today.