Why should you refinance your home loan?

Published on December 3rd, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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When you first decided that you should take a loan for your home, you must have spent a lot of time researching to find exactly what suits your needs at a competitive interest rate. Putting aside the time you spent then, it is recommended for you to evaluate the home loan from time to time, just to make sure that it still continues to meet your needs. However, there are a few more reasons for which you should perform this action. Continue to read and find out what we are talking about.

Saving money with a lower interest rate

There is a great diversity in what concerns the lenders and the loans you can find on the market. Therefore, there is a great chance that you will manage to secure a loan that is pricier with a different lender or you could pay for features that you are not really using on the current loan. If you feel that you might be paying too much, it would be a great idea to get in touch with an expert. That person will be able to compare a great number of loans and see exactly what could suit you.

New features

You might have had the same loan for years and you might have gone through some changes in the meantime. These circumstances could affect your loan and refinancing it could help you benefit from new and exciting features. Flexible repayments, redraw, flexible rate options or portability are only a few of the many features that are waiting to be experienced.

Investing using equity

The refinancing of a home loan can be considered a great way of accessing the home equity for the purpose of investing in different areas such as shares or managed funds. The home equity is also known as the difference between the value of your home and the value of your mortgage’s balance. That is the money that can be used and invested in your own wealth.

The management of the debt

The term of debt consolidation defines the process of folding the high interest debts into a loan that has a lower rate. Usually, this is the mortgage loan. This entire process leads to the conclusion that there is only a set of paperwork to fill in, a single loan to pay and you can also get some generous savings out of this.

The negative part regarding the debt consolidation is that it has the power to turn a short-term loan into a long-term debt. For instance, the personal loan could be transformed into a mortgage. It is advisable to pay the new loan as soon and as fast as possible, otherwise the whole action of consolidating the debts would only mean paying more interest on the long run. The extra repayments are a great way of getting rid of the home loan and squeezing all the benefits brought by the process of debt consolidation.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for home loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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