When Should You Consider Refinancing Your Home Loan?

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A home loan often stands as one of our most significant financial commitments. In the past, most people used to stick with their home loan until it was paid off, rarely evaluating the suitability of the existing home loan. But times have changed, and these days, more and more people are refinancing their home loans within the first 3 years of their loan term. 

So, why would you want to refinance your home loan? Let's break it down in simple terms.

Reason #1: Get a Better Deal

The main reason people refinance is to find a better deal. Imagine if you could lower your interest rate and reduce your monthly payments. Sounds good, right? Well, when you refinance, you have a chance to do just that. But remember, it's not just about the interest rate. You also need to consider any fees or charges that come with refinancing. You want to make sure that the overall cost is worth it in the long run.

Reason #2: Enjoy More Flexibility

Sometimes, you may find that your current mortgage doesn't give you the flexibility you need. Maybe you want to make extra payments and have the option to take that money back if necessary. Or perhaps you want to pay off your mortgage faster without penalties. Well, refinancing can help you switch to a mortgage that offers more flexibility and suits your specific needs.

Reason #3: Increase in Home’s Value

Your home's value has gone up – great news! You should consider refinancing your home loan now for a better deal. When your property value rises, your Loan-to-Value (LVR) decreases resulting in borrowers having higher equity in their home. Most lenders offer reduced interest rates to those with more equity in their homes. 

Reason #4: Tap into Your Home's Equity

Over time, the value of your home can increase. Let's say your house was worth $300,000 when you bought it, but now it's valued at $500,000. By refinancing, you can tap into that extra $200,000 and use it for other financial needs like home renovations, paying off your debts or investing in your future.

Reason #5: Debt Consolidations

If you are looking to simplify and take control of your financial picture, consolidating debts like credit cards or car loans into your home loan is a smart move. This not only helps manage payments more effectively but could also lead to quicker debt payoff. Some financial institutions offer perks like fee waivers and discounts when you centralize your finances with them.

Reason #6: End of Fixed Rate Term

As your fixed rate loan period nears its end, a golden opportunity arises. Refinancing at this point help you dodge the 'break cost' or exit fee associated with leaving a fixed rate early. Once the fixed period ends, your loan automatically reverts to a standard variable rate. You could think about jumping onto another fixed rate or exploring a whole new and better deal via refinancing.

If any of these reasons resonate with you, it might be time to consider refinancing your mortgage. Start by reaching out to a broker at Loan Concern today. Our team is dedicated to helping you find the best refinancing solutions tailored to your needs. 

Don't miss out on potential savings and opportunities – contact us now to explore your options!

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