5 Reasons to Refinance Your Home Loan in 2021
Welcome to the New Year. A new year with super-low interest rates to start the year off on a high. Here at North Brisbane Home Loans, we recommend making a new year resolution to get on top of your finances. And what better way to do that than to save potentially thousands of dollars by refinancing your home loan in 2021. There are multiple reasons to refinance your mortgage in Brisbane and here NBHL has created a list of the top 5 reasons to refinance your home loan in 2021.
What is Refinancing a Home Loan?
Refinancing is when you change your existing home loan to a new one. Sometimes this can be simply a new product offering with your current lender or switching to a new lender all together.
Refinancing gives you the option to explore securing a better interest rate and the possibility of withdrawing on your home equity.
Here are 5 Reasons to Refinance Your Mortgage in 2021:
There are many good reasons to refinance a home mortgage in Brisbane so here’s a list of the top 5 reasons to refinance your mortgage in 2021.
1. You Can Reduce Your Home Loan Repayments
If you’ve had your loan for a few years you might be surprised to learn that your lender hasn’t automatically passed down the best interest rate available to your current loan.
If your current home loan interest rate is around 3.5% for example and you owe $500,000 your repayments would be approximately $2900 per month. By securing an interest rate of 2.5% or lower you could save at least $250 per month.
By reducing the amount of interest you pay and therefore reducing your monthly repayment you are ultimately paying less over the life of your loan. The above example could see you save more than $60,000 over the life of your loan.
2. You Want to Renovate or Improve Your Home
If you’re in Queensland particularly, you may have heard that the coronavirus pandemic hasn’t impacted house prices as originally feared. In fact, many Queensland housing prices have increased.
If your property is one of the lucky ones to see an increase you may have more equity in your loan to borrow against. This could give you the opportunity to borrow some extra funds to do those renovations you’ve always wanted.
Lenders also like to give better interest rates to homes with increased equity.
3. Your Fixed Rate Timeframe on Your Loan Has Expired
Did you know that many fixed-rate loans automatically revert back to a standard variable interest rate when you’re fixed rate timeframe ends? If you just let it continue after this period you may be paying more than you need.
This is a great time to shop around and secure yourself a great new deal.
4. You Want to Start Paying More Off Your Home Loan
By changing the length of your home loan it can help you pay off your loan quicker. Shortening the loan length will therefore increase your monthly repayments but in the loan run this can save you thousands on interest.
5. You Want to Consolidate Other Loans and Debts
Finally, refinancing gives you the chance to bundle all of your other loans together into a single debt under a smaller interest rate.
For example, you may have a car loan or personal loan and credit card debts that you are paying high interest rates on. By refinancing and increasing your home loan amount you can use that extra cash to pay off those loans.
Your old home loan will be replaced by a new one that includes the amount you used to pay out those other debts.