You have had your current mortgage for a few years now and you’re considering ways to save money or pay for that next holiday. Here are a few reasons why you may want to refinance your current mortgage to help achieve your goal;
Better Interest Rate
When you entered into your current mortgage, the interest rate you were paying seemed very competitive in the market. However recently you researched current rates and found that your current interest rate is not as competitive as when you first took out your mortgage.
Increased Equity in your property
When you purchased your current house you were a first home buyer. As a result you only had an8% deposit, and you therefore had to pay lenders mortgage insurance. Now, however several years down the track property prices in local your area have increased by an average of 8% per year, and on top of that you have paid $10,000 off the mortgage. All of a sudden you may find yourself with 25% equity in your property and this will allow you to get a much better interest rate.
Change in Personal Circumstances
When you purchased your house, there were some minor defaults on your credit file. The impact of these defaults penalised you in getting a good interest rate. Several years down the track, these defaults are no longer on your credit file. Thus, you are now in a position to get a lower interest rate.
Reset the loan term
Most mortgages these days are taken out over 30 years, so if you are 5 years into your mortgage term, you may want to refinance to reset the loan term to back to 30 years. Combine this with with a small reduction in the interest rate and you will have a good saving.
Fees and Charges
When you took out your loan there were minimal fees and charges associated with your mortgage. A few years down the track, you are paying an annual fee of $395 and the interest rate has increased when compared to the general market. Combin this with a lower interest rate and you have another good saving.
So how much do I save?
As a very rough guide a 0.5% reduction in interest rates on a $500,000 mortgage can reduce your monthly repayments by almost $140 per month. Over a year this will equate to $1,680, which is tax free and a good contribution to that holiday. Not bad for three hours work on your behalf.
So if you’re now considering refinancing your current mortgage give me a call on 1300 39 39 20 or email me on firstname.lastname@example.org