What you need to know.
Refinancing simply means taking out a new loan to pay out your current mortgage. There are many reasons why you may wish to refinance, for example:
I want a better rate
I’m looking for flexible features
I’d like to streamline my debts
I’d like to use my home equity to invest
I want some extra cash for
Living with debt
Living life creates debt. Owning your own home, cars, dining out, and generally enjoying life, all cost money – money that is typically borrowed from a financial institution. While debt is an essential part of everyday life, it can also wear out its welcome, and wear down your desire to dream for a better tomorrow. One of the reasons why so many Australians are restricted in their ability to achieve their financial goals is because they are simply ‘drowning’ in debt.
When you are deep in debt, you restrict your ability to build wealth before you’ve even had the chance to start. That’s why you need an effective debt elimination strategy.
There are many different lenders who are keen to win your business. The lender you choose and the way you set up your loan in the beginning can make a huge difference to the amount of interest you pay over the term of the loan. In our opinion, the more interest you pay, the less you will have in retirement (as those funds can be directed into other strategies to build wealth once your home loan is paid off) – and the faster you pay off your home loan, the sooner you can start to save.
It's more than the interest rate
Interest rates are relevant and they are an important factor to consider when deciding which loan is right for you. A higher interest rate can mean thousands of dollars over the life of your loan. So getting a nice low rate is something you need to make certain you do.
However, purchasing a home is the biggest financial decision most of us will ever make. Make sure you consider all the factors before you jump in.
Questions to ask about a suitable loan for you
What types of loans are available?
What is the interest rate?
Does it come with an offset account?
Is it variable or fixed interest rate?
Can it be split? Remember, some loans can be split into part fixed and part variable.