Refinancing a home loan is popular, as people juggle their finances to take advantage of competitive interest rates and hopefully, pay off their mortgage sooner. But there are a few important points to consider when contemplating this option;
Question:What are some of the main reasons for you to want to contemplate refinancing your home loan?
- refinancing your home loan can be influenced by various factors including your particular stage in life, such as starting a family, needing extra room for growing kids, downsizing the family home or looking to purchase an investment property, as well as the specific product types and service quality you receive from your current lender.
- It is a good idea to periodically review your current home lending arrangements to ensure they still meet your requirements, especially if your situation or circumstances change.
- Friends and family often make recommendations based on their own positive experience and service received from their own bank.
Question:Is there any paperwork home loan refinance applicants should prepare before making the application?
- Your mortgage adviser will assist you to prepare a current statement of position. This will include an update of your income & expenses and assets & liabilities.
- If refinancing, statements from your current home loan, proof of income and an estimate of what you feel you can afford each month will also be required.
- Your mortgage adviser will have some tried and tested options for the new lending structure.
- If refinancing your home loan to consolidate debt, a reduced loan term that is affordable while allowing for maximum interest savings could be beneficial.
- For certainty of repayments, a fixed rate should also be considered.
Question:A home loan can be a set and forget type of cost – is it worthwhile for your to review your mortgage/loan on a regular basis?
- It is a good idea to periodically review your current home lending arrangements to ensure they still meet your requirements.
- Remember to review all aspects of the package and not just the interest rate.
- The way the lending is structured, in conjunction with credit cards and other facilities may provide an opportunity to save substantial amounts of money on interest costs.
Question:What else should you review on a regular basis?
- Property Insurances such as House, Contents and Car Insurances are also often a set and forget type of cost. An annual review should be carried out, and instigated by your insurance adviser, to ensure property is insured for the correct amounts, and the types of policies are still relevant for your requirements.
- Personal Risk Insurances such as Life, Income & Mortgage Protection, Trauma, Total Disability and Health Insurances should also be reviewed on a regular basis. As your stage in life changes, some insurance covers become more important than others. Annual reviews will make sure that the right cover is in the right place at the right time.