March 2, 2018
Wondering if you should refinance? What are the real benefits and risks of refinancing? Why are so many Australians scrambling to switch to a new mortgage in 2018?
While there are plenty of worthwhile reasons to go through the refinancing process, the top advantage that motivates most homeowners is to simply get a better deal on their mortgage by switching to a lower rate. With the official cash rate continuing to hover at its low of 1.5%, many homeowners are opting to take advantage of the benefits of refinancing now before the rates do go up again.
The last change was in August of 2016 when the Reserve Bank of Australia moved the cash rate down by .25 percentage points to 1.5%. With low inflation and steady wages, the RBA isn’t expected to raise the cash rate just yet. And, with the Aussie housing market finally starting to cool down, experts aren’t predicting the rate to jump back to 1.75% until, at least, the end of 2018, or possibly within the first half of 2019 when the economy is expected to start to pick up again.
What this means for mortgages is, if you are thinking of refinancing, you may want to consider switching to a lower rate sooner rather than later. If you hold off another year or two, rates aren’t likely to be as competitive.
With a slowdown in the real estate market, banks and non-bank lenders are seeing fewer new mortgages, which means they may be more willing to make refinancing an attractive option for homeowners.
Now, before jumping in and switching to a new loan, it’s important to a take step back and evaluate the benefits and risks. What do you hope to achieve by refinancing? Is it worth it for you to switch home loans right now?
Here’s the thing. Not everyone will come out on top if they get a new loan. However, many people can benefit if they take the time to explore their options and understand what is involved with replacing their original mortgage.
Here is a look at some of the rewards and risks.
A Better Interest Rate
A Lower Payment
Security of a Fixed Rate Loan
Pay Off the Mortgage Sooner
Lenders Mortgage Insurance
More Features Could Cost You More
When applying for a new mortgage, in order to get the benefit of refinancing, be sure to ask yourself some important questions and compare the details of what you have right now, in terms of the rate, features, term, and fees, with what you are being promised. Think about the total long-term costs and your own situation and needs before you search and compare rates. In that way, you can be sure to benefit.
Written by Refinancing.com.au
Refinancing.com.au is an end-to-end service that helps people refinance their home loan. We empower you to search for your home loan, and choose the process that suits you.
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