Is your mortgage making you miserable?
Your home loan is likely the biggest purchase you’ve ever made – and if you feel the pressure of paying it off, you’re certainly not alone.
Experts at Digital Finance Analytics estimate a third of Aussie home owners are experiencing mortgage stress.
One way to alleviate stress is to treat the cause of it – such as improving your loan and making it more manageable through refinancing.
Just as you would take your car to get serviced regularly or visit a doctor for a check-up, refinancing – the process of replacing your existing loan to a new and improved loan – is the best way to manage the health of what is likely your biggest investment.
In fact, chances are you can’t afford not to refinance your home loan.
Here are our top 3 reasons why:
1. You’ll save money
If you’re in the robotic rhythm of making mortgage repayments without any strategy or research to see whether you could get a better deal, now is the perfect time to explore your options and learn whether refinancing now will work for you.
One of the most popular reasons to refinance your loan is to switch to a loan which offers a more competitive interest rate or better terms and fees.
A lower interest rate can reduce your mortgage repayments and build some breathing space back into your budget.
Even a reduction of 0.5 per cent on your interest rate can save you tens of thousands of dollars over the duration of a mortgage – not to mention free up cash that you may be able to access to use for another major purchase.
For a rough estimate of just how much you could save by securing a better rate, explore this government calculator.
2. You could shave years off your loan
We’ve all heard the saying: Time is money.
If the length of your mortgage term fills you with dread and you cringe when you do the math on how much interest you’ll be paying over the duration of your loan, refinancing can be the solution to paying off your loan quicker.
By changing your existing loan to one with a lower interest rate and maintaining your usual repayments, you’ll pay down the principal on your loan faster. Be mindful that the key to shortening your loan through refinancing is to switch to a shorter-term loan. Even though you’ll be making higher repayments, you’ll still pay off your home sooner as it’s a shorter loan term – meaning you’ll pay interest for fewer years.
3. You could improve your credit score
Your credit score is essential to your financial fabric. It’s the rating lenders use to determine how trustworthy you are as a potential borrower for any future loan.
While refinancing may affect your credit score initially, it can also help to improve it over time. This small dip in your credit score happens when lenders check your credit reports when you apply, but it’s usually outweighed by the fact that you’re likely to save money when you refinance.
As you pay off your new loan over time, your credit score will likely improve as a result of the subsequent strong payment history. To reap the benefits and boost your score, it’s essential to continue to manage your new repayments.
While refinancing seems simple, keep in mind that you’ll need to engage a financial advisor to do the hard work of researching complicated loan comparisons and helping you avoid or understand hidden fees when refinancing.
Together Financial Services have a team of experienced brokers who can save you thousands on your next loan. As an added bonus, Together are proud to make a social impact through their expert services.
Get in touch with our friendly finance specialists today and discuss your refinance options by calling (03) 8761 9024 or fill out our short online form for a no-obligation consultation.