As the market conditions and your personal circumstances are continually changing, it may be time to revisit your mortgage. You may want to get a better interest rate or even just consolidate finances. It’s probably been some time since you’ve looked at your mortgage & shopped around to see what other deals might be out there, so now could be the time as some banks are offering to refinance cashback to get new customers to switch over to them.
It is always worthwhile reviewing your interest rate and trying to get the best rate out there, to maximize interest savings when refinancing your mortgage, whether that is looking at a sharper variable rate or a fixed rate. If you want to compare interest rates or find out more information, check out our interest savings calculator by clicking here.
There is a thing called the Loyalty Tax, where new customers to a bank get offered a better rate than what an existing customer can get access to. They are more focused on attracting new customers without offering the same deal to the existing customers so be aware of this.
The current growing real estate market prices mean that the value of the property has increased, which creates more equity in your home. Having more equity in your home can result in better interest rates, as the Loan to Valuation Ratio (LVR) decreases, but this also can allow you to refinance without having to pay more Lenders Mortgage Insurance (LMI). Greater equity in your home may give you the ability to increase your loan, giving them access to more funds for home improvements, renovations or other purchases, such as a car.
For example, if you originally purchased your property worth $500,000 and had a loan of $450,000 the LVR would have been 90% as you borrowed 90% of the funds to purchase the property. This high LVR means the customer pays some LMI as it is a higher risk loan. After a few years, your property’s value has increased to $600,000 and the loan balance has reduced to $420,000 the LVR is 70%.
The value of a home can increase easily by completing home improvements, which helps when the time comes to refinance your home loan.
Unsure of where to start or the most suitable option for you? Give us a call and we can discuss our range of options and understand the best choice based on your circumstances!