Aussie homeowners refinanced at record levels throughout the 2023 FY, with 450,177 home loans refinanced nationally. In Queensland, home loan refinancing activity increased by 17.4% when compared with the previous year. This level of activity isn’t surprising though.
With interest rates continuing to climb and the cost of living tracking steadily upward, it makes sense that financially savvy mortgage holders take proactive steps to reduce their monthly repayments. But is 2024 the right time for you to refinance a home loan?
What is Home Loan Refinancing?
Mortgage refinancing is when you take out a new loan to replace your existing home loan. Refinancing is a strategic financial move that can lead to reduced monthly payments, improved loan terms or the consolidation of debts. In this way, a home loan refinance can help homeowners save money and reduce financial stress.
What are the Benefits of Home Loan Refinancing?
There are numerous benefits to refinancing a home loan. Common advantages include:
- Reduced monthly repayments as a result of lower interest rates.
- Access to revised loan terms for improved financial flexibility.
- Consolidating high-interest debt for simplified payments.
- Obtaining useful loan features, such as an offset account or a redraw facility.
- Drawing on property equity to fund renovations or an investment purchase.
There’s clearly great value in home loan refinancing. However, as with any major financial decision, it’s a good idea to get expert advice before refinancing a home loan.
Factors to Consider Before You Refinance a Home Loan
How can you decide if 2024 is the right time for you to refinance a home loan? There are a few factors to consider:
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Take time to research current interest rates:
When considering refinancing a home loan, it’s crucial to research and understand the current interest rate environment. Compare current home loan refinance offers with your existing rate or use a refinance home loan calculator to see how much you could save.
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Do a thorough comparison of loan terms:
It’s important to look beyond home loan refinance rates. You’ll also need to consider loan duration, loan features and any associated fees or penalties.
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Weigh up the costs vs benefits:
Refinancing does come with certain costs. Take time to calculate all of these potential costs to ensure that the benefits of refinancing outweigh any associated expenses.
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Consider your credit score:
Credit scores significantly influence the interest rates offered by lenders. So, before you decide to refinance, check your credit score and, if necessary, take steps to improve it.
Does this level of preparation sound overwhelming? If so, don’t panic! An experienced mortgage broker can do all the hard work for you to ensure you’re getting a great deal.
How Much Could You Save With a Home Loan Refinance?
How much can a person save by refinancing? Let’s consider a theoretical scenario: Taylor has a $650,000 mortgage that originally came with a competitive fixed rate. However, once the fixed term ended, the loan automatically rolled over to the lender’s standard variable rate of 8.40%. As a result, Taylor decided to talk to a broker about home loan refinancing.
After researching and comparing several competitive home loan refinance offers, the broker recommended a different lender with a home loan refinance rate of 6.1%. As a result of refinancing, Taylor’s monthly payments were reduced by $459 (saving over $5,500 per year!).
Talk to a Broker About Home Loan Refinancing in 2024
Are you wondering if this is the right time for you to refinance a home loan? Sunshine Coast Financial Solutions offers a free Home Loan Health Check that can help determine whether you could benefit from home loan refinancing. Our expert team of brokers are committed to helping you achieve the best possible outcome, every time.
This means we’ll give you professional and unbiased advice. If there’s no measurable benefit to refinancing right now, we’ll let you know. But, if refinancing could help you save considerable money or access a better range of loan features, we’ll help you find the best home loan refinance offers for your situation.
Are you ready for a Home Loan Health Check? Book your free appointment today.