With the lowest mortgage rates in years, there has never been a better time for Australians to refinance a home loan. A resource boom in the form of iron ore, coal, and natural gas larger than any save the 1850 gold boom has helped fuel favorable rate cuts for a home mortgage.
Refinance Soon to Get the Most Favorable Rates
Since the start of November, 2011 the Reserve Bank of Australia has cut rates by 1.5 percentage points. You may want to hold off a little while longer to refinance, however, as the RBA is planning a steeper cut soon, in response to the failure of the big four banks to pass on the new lower rates. Some estimate that the cash rate will be cut to a record low 2.75 percent by February, providing for even lower rates when refinancing a home loan.
Reasons Why You Should Refinance your Home Loan
Lower rates on a home loan is always a good idea but that’s not the only reason you should consider refinancing your home loan. Refinancing allows you to rectify any mistakes you may have made in choosing your previous mortgage broker. You can find a new lender you will be happier with and you will have the option of switching from a fixed loan to a variable loan if you should prefer. Other reasons to refinance include debt consolidation or to access your equity. If you have other outstanding loans you can refinance your mortgage to pay off those debts and have one payment under the newer rates or you can access the equity in your home for repairs or vacation.
Possible Costs of Refinancing a Mortgage
Of coure that’s not to say that once you refinance you will suddenly be drowning in cash- there are some costs of which you should be aware. You should pay particular attention to any entry, ongoing, or exit fees when comparing the loans. A 1% lower rate on a $300,000 loan can save you $3,000 a year but you must include any additional costs such as mortgage insurance and application fees and the stamp duty included on any new mortgage. The exit fee will likely be the most expensive consideration when refinancing a mortgage.
Consult An Expert to Discover if Refinancing is Right For You
Rates are changing and without speaking to an expert mortgage broker you may not know what rates are available to you. Contact a professional to discover how much you can reduce your rates- you may be able to save even more money than you think.
