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When to consider refinancing your property

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Refinancing can help you find a home loan that is better suited to your current personal and financial situation. If you’ve had the same loan and interest rate for a number of years, you may be paying more than you need to. Read on to find out some of the reasons why you might consider refinancing your home loan.

1. Interest rates are at a historic low

Interest rates are currently the lowest they’ve been in decades, so if your rate is more than 18 months old, you may be overpaying. By refinancing, you could save substantially. Homeowners who refinance with Lendi save an average of $2,832 in interest over the next year of their home loan.

It’s always smart to compare your existing home loan interest rate with other rates on offer. Over the past couple of years, interest rates have dropped to historic lows. This means that if your current home loan is more than a few years old, you are very likely paying more in interest than you need to.

Check what interest rates your existing lender is offering to new customers. Your lender is likely to offer you these reduced interest rates if you have a history of consistent repayments and good credit. Just call and ask!

If you don’t want to directly get in contact with your lender about refinancing to a lower interest rate, Lendi can negotiate on your behalf. Get in touch with a Home Loan Specialist today.

You can easily compare home loans and interest rates on Lendi’s online platform, so don’t forget to consider other lenders.

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2. Your income has changed

Have you had a significant increase or decrease in your income? It might be time to consider refinancing your home loan.

With an increased income, you might be in a position to make larger monthly repayments which could help you pay off your home loan faster. If you don’t want to refinance to a loan with a shorter repayment period and larger monthly repayments, you still have options if you’d like to take advantage of your higher income.

On a variable interest rate home loan, you have increased flexibility that allows you to make uncapped extra repayments. When you refinance, you may also be able to add loan features, such as an offset account or redraw facility to help reduce your interest charges.

Experiencing a decrease in your income can make it difficult to make your minimum loan repayments, so refinancing can make things easier for you. This might be a good time to reduce your monthly repayments and extend your loan repayment term. The longer you take to repay your loan, the more you’ll end up paying because of interest. So, it’s a good idea to seek a home loan with a low interest rate and low or no annual fees.

3. You’d like more flexibility or more stability

If you have a home loan with a fixed interest rate, you get a reassuring sense of stability in that your interest rate is fixed for a 1-5 year period. On the downside, compared to a variable rate loan, you have limited flexibility.

With a variable rate home loan, you can make unlimited additional repayments and add on loan features that aren’t usually available for fixed rate loans. By making extra repayments, you can pay off your home loan faster and pay less in interest. If you receive a bonus from work, a tax refund or another unexpected sum of money, you could put it straight towards your home loan.

Many fixed rate home loans still allow you to make extra repayments, but they are usually capped at a certain amount annually. However, with a fixed rate loan, it’s great to know that your rate is protected from any market volatility during your fixed period.

If you do decide to refinance out of a fixed rate loan before the fixed period ends, you may be subject to break costs.

4. You feel overwhelmed with different debts

Having a number of loans and credit cards that you need to pay off can be overwhelming. You can streamline your debt into one monthly repayment by consolidating your debt. The types of debt you can consolidate with your home loan are:

  • Credit cards
  • Personal loans
  • Car loans

These kinds of debts often have high interest rates, so by bundling them with your home loan, you only have to make one monthly repayment that is subject to the home loan interest rate. This can help you to better organise your finances and avoid missing payments.

How much can you save by consolidating debt?

Roll your credit card, car or personal loans into your home loan.

Calculate savings

5. You’d like to access equity funds

Your equity indicates how much of your home you own outright. It’s not solely determined by how much you’ve paid off your home loan, but also the updated value of your home. So, if the market changes, or you’ve made improvements to your home — your equity can change.

There are many reasons why you might like to access funds from your equity. Maybe you’d like to renovate or book a trip, but you’re short on cash. Or you plan on buying another property or a new car.

Whatever the reason, through a home equity loan, you may be able to access part or all of your equity. Home equity loans are a good alternative to other consumer loan options, like car and personal loans, that have high interest rates.

How much equity can you access?


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Got a home loan question? Just ask!

We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a Home Loan Specialist here

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: refinance, interest rate, home loan, lender, variable interest, fixed interest, saving, break cost

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates
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Home loan repayment saver tool

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Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
# 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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