Most things in life will change over the next 25 – 30 years. Your home loan should be no different. A set and forget strategy with your home loan could mean you are paying thousands more than you should and missing out on the potential to own your home sooner. Have you done a review lately to make sure that your home loan still fits your life?
There is more to refinancing than just cheaper interest rates.
· Lower repayments or change loan term
Life changes and the home loan market changes also. As an example, a family who may have started their loan 3 – 5 years ago could still be paying 5% pa interest on their mortgage. Yet it is common for many homeowners now to be paying an interest rate less than 4% if the conditions are right. If this family were to refinance from 5%pa down to 4%pa their monthly repayments would be lower allowing them to have more money available each month for other household bills. If they wanted to reduce their payments even further they could consider extending their loan term back out to 25 – 30 years depending on what is right for their goals. Lowering repayments or extending the loan term may be of benefit for short to medium term cash flow.
· Change loan structure
Home loan and ownership structure needs can change over time. Owners lifestyles may change and a change if loan structure may help support these changes. Examples of this may include when a younger homeowner started out using their parent’s property as a guarantee and now they are in the position to remove the parental support or sometimes relationships change and not everyone how owns the home still wants to own the home, refinancing can help joint owners to change the title of ownership into one person’s name without having to sell the property. This can be down between family members, friends or spouses.
· Own your home sooner
Do you have a dream to own your home outright? Bring that dream a little closer with refinancing to a lower rate or a simple restructure and then reinvesting the savings back into the home loan. small changes in how you manage your home loan can save you years.
· Consolidate debt and simplify
Is balancing all those repayments proving to be hard? You can consider using the equity in your home to consolidate all your debts into one payment using the same low-interest rate as your home loan and reduce the number of fees you are paying to each individual credit provider. For the right reasons, debt consolidation can help save money and make life a little simpler.
· Release some equity for future growth
Creating wealth for the future is a great life goal. For some people, they own as much if not more of their home than the bank does. Releasing some of the equity in the home can be a great way for people to step forward and realise some of those other life goals they may have. Releasing equity in your home doesn’t just have to be for investing. It can be done for any worthwhile reason you may have.
Does your home loan still fit your life? there are many ways refinancing can help. Chat with Greater Finance today to learn more.