It’s been a busy start to the year for Mortgage Brokers in Sydney. After almost a decade of lower-than-average interest rates, the Australian market has seen the Reserve Bank of Australia (RBA)increase the cash rate from a record low of 0.10% to 3.60% (correct as of April 2023). These increases have been implemented to help curb rapidly rising inflation caused by Government spending and economic stimulus during the pandemic.
The cash rate increases have impacted variable mortgage rates significantly. Many households arefeeling the pinch as their variable rate home loans have increased by up to 3.5% in 12 months. Therepayments on the average Australian home loan of $600,000 have increased by $1,200 per monthto $3,417 per month.
As our cost-of-living increases, it is important to reduce your costs where possible. Refinancing yourhome loan can be an effective way to reduce your monthly repayments. Below we discuss the 5 keyreasons to consider refinancing your home, car or personal loans:
1. Reduce your home loan interest rate, it is important to review your home loan every 18 months to ensure your rate is competitive in the market. A lower rate means lower home loan repayments and additional cash flow in your budget. We have a free calculator that will estimate your savings and borrowing capacity here.
2. Debt consolidation, if you have debt with a high interest rate, like car loans, personal loans orcredit cards, it can be beneficial to consolidate this debt into your home loan. By consolidating yourdebt, it will mean you have a lower total monthly repayment and one repayment to manage.
3. Accessing equity to fund renovations, an investment property or personal expenses (cars,
holidays or lifestyle items) or business assets. Accessing the equity in your home is one of the mostcost-effective ways to borrow money, there are a number of banks that have flexible solutions withthis strategy.
4. Reducing your loan term. When refinancing to a bank with a lower interest rate, you can
compound this benefit by keeping your repayment at the same amount and reducing your loanterm.
5. Take advantage of lender offers, including cash back to refinance your loan, waived applicationfees and discounted introductory rates*. These offers vary from bank to bank, so it’s important toconsider if these products are suitable for your circumstances, get in touch with your local mortgagebroker to discuss your option.
*Eligibility and Lenders' terms and conditions apply.
While there are obvious benefits to refinancing your home loan, there are costs involved, like exitand application fees and charges. It’s important to ensure your savings outweigh these costs and youare left in a better position over the short and long term.
If you are looking for a mortgage broker in Penrith, Parramatta or the Blue Mountains, please get intouch. We can compare your home loan and calculate the savings for your home loan refinance.
