21/11/2024
Should you Refinance?
PROS:
1. Potentially lower monthly repayments
The primary benefit of refinancing to lower your rate and / or monthly mortgage repayments. Switching to a lower interest rate could save you time and money on your home loan.
2. Access equity from your home loan
Equity is the difference between your property’s current market value and what you still owe on your home loan. For example if you owe $300,000 on your home loan, and your property is valued at $900,000, your equity would be $600,000.
3. Fixed or Variable
Fixed-rate home loan locks in your mortgage repayments at a set rate for a specific period, protecting you from interest rate increases, BUT you won’t benefit if rates drop.
With a variable rate, your repayments fluctuate with market conditions, meaning they can either rise or fall.
CONS:
1. Refinancing usually involves additional costs
2. Refinancing before the fixed period of your home loan ends may incur a break cost. Be sure to touch base with your broker as they can inform you of these additional charges before you decide.
3. You may have to pay costs to establish a new loan, such as establishment fees, valuation fees, and settlement fees.