What would you say if we told you some home loan lenders are so desperate for your business that they will hand you thousands of dollars in cash if you refinance your home mortgage with them?
Even better, this money can be spent any way you like – whether that’s covering some of the costs associated with refinancing your mortgage loan, such as application fees, or on spoiling yourself with a big-ticket purchase.
There are plenty of refinance cashback deals around at the moment, ranging between $1,000 and $5,000. And while a cashback deal shouldn’t be the main reason to refinance your house loan, it can sweeten the deal, making it even more compelling.
With that in mind, here are four reasons why now might be a great time to think about refinancing.
1. Get ahead of likely interest rate rises by fixing your home loan
Australia’s official interest rate has been kept at a record low of 0.10% for close to 18 months now. However, many experts are forecasting a rise in the coming months, thanks to rising inflation and a resurgent economy.
When the Reserve Bank lifts the cash rate, mortgage lenders will almost certainly respond by raising interest rates on their variable-rate home loans. That will make your monthly repayments more expensive – unless you lock in a lower rate now by refinancing to a fixed-rate home loan.
2. Build wealth by borrowing against your equity
Soaring prices during the property boom of the past year have created record housing wealth for Australian homeowners. That’s because the spike in values has built up equity (the difference between the market value of your home and what you owe on your mortgage).
You can borrow against this equity when you refinance. You can then use the funds released to build wealth by funding home improvements or as a deposit on an investment property.
3. Save money by refinancing to a more competitive loan
It’s no secret that lenders reserve their most competitive interest rates for new customers, with an enquiry by the Australian Competition & Consumer Commission finding many borrowers with older home loans (those at least three years old) were paying significantly more than borrowers with newer loans.
So, if you took out your loan more than three years ago, there’s a good chance your house mortgage isn’t as competitive as it once was. Refinancing onto a lower rate could save you tens of thousands of dollars over the remaining life of your loan.
4. Save money by refinancing to a lower-rate loan
It’s not just Australia’s mortgage market that may have changed since you first took out your mortgage. Your financial position may have also improved – which means there may now be more lenders willing to do business with you, and at lower interest rates.
Thinking about making a switch? NMC Finance is an experienced home loan mortgage broker and can help you refinance. Contact Nathan Coad on 0498 766 639 or firstname.lastname@example.org to find out more.
* This blog is intended for general informational purposes only. For personalised advice tailored to your unique financial situation, please contact NMC Finance.