If your home loan has been taking too much of a hefty chunk out of your finances lately, it could be time you start re-thinking your mortgage options. A lot of homeowners in Australia simply stick to the same mortgage plan for years because they either don’t believe they can get a better deal, or they think that refinancing is too much of a risky option.
While refinancing won’t always be the best step for you if you’re unsure about your mortgage rates, it could help you to save a great deal of money in the right circumstances, all you need to do is talk to a broker at Home Loan Cashback to make sure that you choose a deal that’s right for you, and one that offers as few fees as possible.
So, what should you look at when you’re refinancing?
Fixed Interest Rates
One thing to consider when you’re moving into the world of refinancing is whether you want the assurance and confidence of a fixed rate loan. If you want to make sure that you’re going to pay the same price for your mortgage every month for a number of years, then a fixed loan is the best solution for you.
The only thing to remember with this is that you need to make sure that you’re happy to stick with the same home loan for the full length of your chosen term. If you try to refinance again during your term, you could be hit with a fee.
Variable Interest Rates
Alternatively, if you don’t mind a little uncertainty in your loan payments, and you prefer having flexibility when it comes to your mortgage, then you might want to consider looking at variable interest mortgages. For example, some variable rate loans come with 100% offset account facilities, which make it easier to save back money and pay off your loan.
The only problem with variable mortgages, of course, is that your rate could change at any time, which means that you’ll need to budget for the risk of a rate rise.
Split Rate Loans
One option that you could consider when you’re refinancing is the solution of mixing your home loan between both fixed and variable interest options. This means that a portion of your payments will be fixed, giving you a certain level of rate security, while another portion will be variable, allowing you to take advantage of the great flexible features you want.
Features That Make Paying your Mortgage Easier
Ideally, when addressing your refinancing options, you’ll need to look for a new deal that gives you the flexibility to pay off your mortgage with greater ease. For instance, this might mean looking at deals that allow you to make extra repayments when you have more money to spare, reducing the amount of interest you pay significantly.
Alternatively, you could also consider things like:
- Mortgage offset accounts: Mortgage offsets are a great way to bring down the interest you pay by replacing your everyday account. The offset can have your salary deposited into it, and you’ll also receive a debit card that you can use for withdrawals. This account reduces interest because the balance is offset against the home loan principal. So, if you have a balance of $40,000 on a mortgage of $400,000, you’ll only pay interest on $360,000.
- Flexible repayments: When you’re looking for a home loan that’s worth refinancing to, it’s a good idea to look for something that allows you to choose your payment schedule. For instance, you could pay your repayments fortnightly, instead of monthly, which means that you pay more of your mortgage, faster.
For more information on how to get the best mortgage deal, whether on your first home loan or when you’re refinancing, contact Home Loan Cashback!
