When was the last time you reviewed your mortgage? Do you know what interest rate you are currently paying?
You would be surprised at just how many people do not know the interest rate they are paying on their mortgage, and yet it is the largest and most important item in their family balance sheet.
Now is probably the best time in a while to look at your mortgage and see if there is a better deal out there! The RBA has lowered the official cash rate twice this year, in June and July. Interest rates are at their lowest levels on record.
The competition is strong for lower rates but also incentives like no application fees or free offset accounts, being offered to win over your business. Some lenders are even offering cash rebates if you move your banking across to them.
The other change in the industry that has many people excited is the lowering of assessment rates after APRA eased their lending guidelines.
What this means for you the borrower, is that the lender no longer expects your loan to service on a minimum assessment interest rate of 7.25%.
Your new loan is now required to service on the interest rate you are applying for plus 2.5% buffer.
If you are looking to refinance to a rate of 3.28% say, you will be assessed at 5.78% instead of the old 7.25% rule. This can increase your borrowing capacity by 10-15%, allowing many borrowers to refinance their existing mortgage to get a better deal or qualify for additional borrowings.
So don’t stick with the same mortgage assuming this is it! You could possibly save $100’s of dollars, off your current monthly mortgage repayments if you were to refinance to another lender.
Don’t be afraid of the process either. Mortgage Brokers are here to help you. We guide you through the whole process from pre-application through to settlement.
Refinancing and cutting down your monthly repayments and having extra funds in your pocket each month is not the only reward on offer. If you have managed to live quite comfortably with your monthly repayments, then with a reduced interest rate, you could pay the same amount as you were and cut the life of your loan down, having it paid off quicker.
Imagine paying your home loan off, say 5 years earlier, because you stuck with the same amount you were paying on your old loan.
You may also want to look at refinancing if you find your current loan just doesn’t have the features and benefits that suit you and your family.
You may have additional savings sitting in a savings account and so it would make sense for you to have an offset account attached, reducing the amount of interest you are paying on your home loan.
You may wish to redraw on your advance payments, but this feature is not available to you in your current loan. So aside from the potentially reduced repayments, a refinance is a great opportunity to make sure you are getting everything you need out of your home loan, making it work for you.
Another reason people look at a refinance is to access the equity they already have in their property. You may be looking to renovate your home. Need a new kitchen? Bathroom too dark and pokey? Time for a swimming pool the whole family can enjoy? Perhaps your fences are aging and need replacing.
Any of these needs plus many others are utilised by a refinance, to access equity. Lenders will, in most cases, comfortably look at a refinance with cash out up to 80% of the value of your home. So, if you are only owing 60%, you can look at cashing out up to 20% of the value of the property.
If any of this resonates with you, then it sounds like we need to have a conversation about what a refinance could mean for you and your family, especially with the Christmas period around the corner.
Hi, I’m Kirstie Penton and I’m your local Gold Coast Mortgage Broker. Give me a call today and we can meet for a coffee and a chat about your goals, your circumstances and how I can assist you in making them a reality.
Contact by calling us on 1300 928 227 or email info@hfinance.com.au. hfinance is a mortgage brokering business – click to speak with a Sydney Mortgage Broker, Gold Coast Mortgage Broker or an Australian expat mortgage broker.