Refinancing Your Home Loan
Refinancing your home loan can offer several benefits such as:
- Lower interest rate: By refinancing to a loan with a lower interest rate, you can reduce the amount of interest you pay on your mortgage over time, which can save you thousands of dollars in the long run.
- Consolidation of debt: Refinancing can also be used to consolidate high-interest debts such as credit card debt or personal loans into one manageable loan with a lower interest rate.
- Access to equity: If you've built up equity in your home, refinancing can give you access to that equity to use for other purposes such as home renovations, investments or education.
- Flexibility: Refinancing can also give you more flexibility in terms of loan terms, such as the ability to switch from a fixed rate to a variable rate loan or vice versa.
- Potential to save money: Refinancing can potentially save you a lot of money in the long run through lower interest rates, consolidation of debt and access to equity.
It's important to note that refinancing also comes with costs, such as application fees and government fees, so it's important to weigh the costs against the potential benefits before making a decision. Generally, banks will offer a cash back incentive to move your home loan to them which more than offsets these costs, meaning you save money from day one.
Quick example?
$750,000 - Home Loan Balance
6% ($45,000 per year in interest costs) - Current Home Loan Interest Rate
5% ($37,500 per year in interest costs) - Refinanced Home Loan Interest Rate
$7,500 per year - Money Saved
It's that simple!