These days we hear a lot about the mortgage term ‘refinancing’ but what actually is it and what are the reasons people do it?
To refinance your mortgage (or home loan) refers to the replacement of an existing home loan with a new home loan, with different terms and usually increased savings.
Top Reasons People Refinance their Home Loan
The top reasons people refinance their mortgage includes:
- To get a lower monthly mortgage payment – this is achieved by refinancing into a new, lower-rate home loan. It could be a fixed rate loan, a variable rate loan or a split rate loan (which is a combination of both).
- To consolidate loans – this is useful when you have multiple debts such as credit cards, personal loans and a home loan and you roll them all into the one loan, which makes repayments simpler and easier to budget for, not to mention consolidating loans can save you thousands of dollars.
- To free up some cash: you can refinance your home loan to draw cash from your home’s equity for the purpose of either debt consolidation, home renovations, investments or simply to have access to some extra cash.
- To reduce or alter risk – if you currently have a variable rate home loan, but now feel as though you would benefit from fixed payments, you can refinance your home loan into a new fixed rate loan to better meet your changing needs (or vice versa: change a fixed rate to a variable).
- To pay off your mortgage sooner – if you want to pay your home loan off sooner, you can build up the equity in your home quicker by refinancing into a new home loan that allows you to accelerate your repayment schedule.
To speak with a loan consultant about refinancing your home loan today, simply fill in an express enquiry form to your right, or call 1300 138 188 to learn how refinancing your home loan will better your financial future.