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6 reasons to refinance your home loan in 2022

Refinancing is one of the best ways to refresh your home loan and find a deal that suits your current situation.

Most borrowers will have a mortgage for 25 years or more, and your needs will change over the life of your loan due to the unpredictability of life. Naturally, your home loan should change and adapt with you.

Looking to change the terms of your current loan to better suit your needs? Here are 6 key reasons to consider refinancing your mortgage in 2022.

1. Refinance to lock in a fixed interest rate

With interest rates on track to rise in 2022, it could be a smart move to refinance to a fixed rate mortgage.

With a fixed interest rate, you don’t have to worry about interest rate fluctuations as your rate will remain the same during your fixed term. This also means that budgeting becomes easier as you’ll know how much you owe each month.

Lenders are still offering competitive fixed rates that could help you lock in a current low rate for the next 1 to 5 years!

The main downside of fixing your interest rate is the lack of flexibility it brings. You likely won’t be able to make unlimited extra repayments or access certain loan features, like offset accounts and redraw facilities.

So, if you’re craving some of the flexible elements of a variable rate mortgage but still want some stability, you could consider getting a split rate home loan. This means that one portion of your loan will be charged interest at a fixed rate, while the other portion will have a variable interest rate.

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2. Refinance to adapt to your changing lifestyle and finances

Chances are that your personal and financial circumstances have changed since you initially secured your home loan. These changes could include:

  • Having children
  • Adult children moving out of home
  • Needing a larger or smaller home
  • Increased or decreased income
  • Changed financial goals and priorities

Any of these changes could impact your ability to repay your home loan – both positively or negatively.

For example, if your income has increased, maybe it’s time to consider increasing your minimum repayment amount when you refinance. After all, the faster you pay off your loan, the less interest you’ll pay overall.

3. Refinance to consolidate debt

Managing your home loan repayments can be stressful enough as it is, but it can become more difficult if you have to worry about repaying other debts too.

If you’re keen to streamline your finances, consider debt consolidation. This allows you to merge any personal loans, car loans and credit card debts into one monthly repayment together with your home loan.

Your consolidated debt will have the same interest rate as your home loan. Home loan interest rates are typically lower than the rates you can expect on credit cards and unsecured debts.

4. Refinance to get a lower interest rate

A common reason that borrowers refinance is to get a reduced interest rate. It’s a good idea to be aware of what rates your lender is offering new customers.

If your rate is higher than these new rates, get in touch with your lender and see if you can negotiate a lower interest rate.

But don’t be afraid to look elsewhere. Lenders aren’t known for rewarding loyal customers, so if you can find a better deal with another lender, it could be worth it to make the switch.

Home loan comparison websites can give you an easy overview of home loan interest rate options on the market.

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5. Refinance to switch lenders

There are many reasons why borrowers refinance to switch lenders, including:

  • Dissatisfaction with customer service
  • Poor communication
  • Inflexibility when it comes to making repayments
  • Lack of convenient mobile phone apps
  • Ethical reasons (i.e. switching to a lender whose values align more closely with their own)
  • High fees

Even if you have a great home loan deal, if you aren’t satisfied with the level of service your lender offers, it can be a dealbreaker.

6. Refinance to access equity

When you pay down your home loan amount with regular principal and interest repayments, you build equity. Equity, also affected by your property’s value, indicates the proportion of your property’s value that you own outright.

It’s calculated by subtracting your home loan balance from your property’s market value. For example, if you have a home valued at $500,000 with a $250,000 loan balance, your equity is $250,000 or 50%.

You can tap into your equity for a number of purposes, not just limited to property-related expenses. Equity can fund:

  • Renovations
  • The purchase of another property
  • Investments
  • Property maintenance
  • Large expenses (e.g. new car or holiday)
  • Paying off other debt

Home renovations can increase your home’s value which will ultimately boost your equity.

To access your equity, you’ll need to get a home equity loan through refinancing. Read more about how you can access and use your home equity here.

If you want to refinance your home loan, it’s smart to have an expert on hand. Lendi’s Home Loan Specialists can help you find a new loan that suits your needs. Book an appointment today.

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

Tags: home loan, refinance, fixed rate home loans, fixed-rate mortgage, fixed interest, interest rate, variable interest, debt consolidation, equity, home equity, home equity loan

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# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 35% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors.
*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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