The benefits of refinancing your home loan: Make your mortgage work for you

17.9.13Taking out a home loan for purchasing property is one of the biggest commitments that most Australians will make in their lifetimes. It is a debt that will most likely last for the majority of your life, and will become a major factor to consider when it comes to organising your finances.

After having a home loan for a while, it can be easy to forget about the various features and options available to you. After all, it’s important to make your home loan work for you in order to provide you and your family with financial security heading into the future.

This is where refinancing your home loan can come in handy. Now could be the perfect time to undergo this, especially with the historically low cash rate offering the potential for scooping up a competitive new interest rate.

Low interest rates are good for a number of reasons. Not only do they allow more people, including first home buyers, to access the property market, it also allows current homeowners to make the most of their home loan features.

For example, if you currently have a variable rate home loan package, taking out a fixed loan for a period (three to five years) could help you to lock in this low rate and reap the benefits of a small interest rate well into the future – regardless of whether the market increases again.

Furthermore, there are a number of different features that you could possibly have attached to your loan that can be utilised for a number of reasons. Chatting with a financial expert will help you gauge how viable these options are for you.

Aspects like lines of credit, redraw facilities and offset accounts can all be utilised by smart investors and homeowners alike to further their own agendas and help them to achieve their property goals.

Accessing the equity tied up in your home loan is one of the most common reasons for home loan refinancing – and for good reason!

Equity is the difference between the value of your property, and how much you have left to pay off of your home loan. After making repayments for an extended period of time, you will find this amount slowly begin to accumulate.

Refinancing your home loan can give you access to this wealth, which acts like a credit card, and you can use it for your own desires. Whether it be further property investment or taking a family holiday, these are all made possible through home equity utilisation.

Finally, refinancing your home loan can help you change the amount of your repayment. While this will vary between lenders, the option to reduce the monthly repayment amount can be a great help if you find yourself under financial hardship.

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