Is It Time To Refinance? - Pearl Financial

Is It Time To Refinance?

By Shane | Refinancing

Apr 26

You’re probably wondering if now is a good time to refinance your mortgage. So, how do you really know when it’s time to refinance? According to most experts, it is recommended that you conduct a financial health check at least every three years and that you also review your home loan at least once a year.

But then again, how do you know if it’s time to refinance? Should it be as soon as you’ve sourced a better rate or should it be when your existing mortgage no longer matches your needs? It can really be a difficult question to answer yourself. To help you with that, this article will cover some points for you to think about before deciding on whether it’s time to refinance your mortgage or not.

The right time for you to refinance will mostly depend on your personal situation. You should probably discuss your options in detail with a specialist mortgage broker, an accountant, and a financial expert to guarantee that refinancing makes financial sense for you.

In general, it may be time to shift to a new lender when your lender’s interest rate is no longer competitive or you encounter a major financial or lifestyle change. You may want to transfer to a new lender if you’re looking for features that your existing home loan does not offer. A good example of features that your home loan may not have offered you is the ability to access the equity in existing property or the ability to make unlimited additional repayments.

Furthermore, you may also like to shift to a fixed-rate or split-rate loan to take advantage of a low-interest rate environment, especially if you believe interest rates are likely to rise in the near future. Lastly, you may need to consolidate debt.

 

What are the factors you have to consider?  

Finding a more competitive interest rate to lower your repayments is probably one of the most common reasons to refinance your mortgage. In addition to that, there are also several lifestyle and financial factors you need to consider before making the move.

  • You need to consider how your lifestyle will impact your borrowing needs. If you’d like to access equity you have in existing property to help you fund a renovation, you may want to consider refinancing to a line of credit, a home equity loan or a mortgage that offers an offset account and redraw facility.
  • You should consult with a financial adviser or accountant to assist you with your future budget plan and to help you decide whether now is the right time for you to refinance. A specialist mortgage broker can help you understand how much you can afford to borrow so that you can comfortably meet your repayments. Make sure to factor out any change in your personal situation into your budget plan as it may also affect your borrowing capacity.
  • Another key factor to consider when deciding whether it’s time to refinance is the security of your current employment. Many lenders consider employment as an indicator of a dependable income which validates that you can service a loan. Now may be a good time to refinance if you are between jobs or you are only employed on a casual or part-time basis.
  • What will largely influence your decision on whether it’s time to switch lenders or not is the cost of refinancing your home loan. You’ll have to account for discharge fees charged by your current lender including upfront application fees charged by the new lender. Be sure to discuss with your accountant or financial planner to assist you with your calculations.
  • Look for a specialist mortgage broker to discuss the type of loan that will complement your borrowing needs. Your financial and personal situation will be evaluated to help you reach a decision about whether it’s time to refinance.
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About the Author

Shane specialises in helping Gen Y professionals and business owners make an impact by accumulating more assets, generating more income, and having more time to enjoy life. He has a Master of Applied Finance, an MBA, and a Master of Financial Planning. He is also a terrible golfer.

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