Knowing when to refinance your home loan
Refinancing your home loan could save you money that would otherwise be spent on interest. Making the right move at the right time could maximise your savings, but how do you know when to refinance? Read on to learn the basics and find out how to make a right decision about the future of your home loan.
Is it time to refinance your home loan?
Well, it could be easier than you think. Refinancing could potentially take years off your home loan term and possibly save thousands of dollars in the process. However, you need to get your timing right; refinancing your home loan at the wrong time may end up driving up your costs.
Refinance with a good credit rating
If you have a good credit rating, it might be a good time to think about refinancing your home loan. Most loan applications involve a thorough credit report check by your potential lender, and home loan refinancing is no exception. Not sure what your credit rating is? Let’s talk and we can help.
What is a credit report?
Basically, it’s your credit history. This includes information about your existing credit and types of credit, if you have made credit card repayments on time, how many applications you have made, and if you have been involved in serious infringements.
A good credit score boosts your chances of landing a loan. On the other hand, if you’ve got a fair bit of debt hanging around you may want to pay that down before you refinance your home loan, as you could stand a better chance of succeeding in your application then.
Consider a lower rate, but compare the exit fees
It's easy to be attracted to lower interest rates for obvious reasons – it makes sense to switch over to lower interest rates which could save dollars. However, you need to do the math to see if the switch is worth the cost. This includes exit fees, depending on your lender and where you’re up to with your loan repayments. Hint, we can help you calculate if refinancing is worth the cost.
Review your home loan regularly
Remember that the world of interest rates is constantly changing, and you need to keep reviewing your home loan on a regular basis. The good news is, we’ll work with you to check on this annually to make sure your home loan is working hard for you.
Keep in mind, this is not to say that you need to keep refinancing your home loan every couple of years – you should be mindful of the costs involved in switching loans, and refinancing all the time could cost you much more than what you could gain. Watch out for the right opportunity and stay in touch!
Is now a good time for you to refinance your home loan? Get in touch today to find out more.