If you’re a homeowner in Australia, you may have heard that lenders are offering lower interest rates to new borrowers. This may leave you wondering if now is a good time to refinance your mortgage. However, it’s important to consider more than just the current interest rate when deciding whether to refinance your mortgage.
What are the advantages and disadvantages of refinancing your mortgage in Australia, and how do you decide if it’s the right move for you, even in a rising interest rate environment.
Advantages of Refinancing Your Mortgage
Lower interest rates: Refinancing your mortgage can lower your interest rate, which can save you money on your monthly mortgage payments. Even if interest rates have been rising, if you can secure a lower interest rate through refinancing, you may still be able to save money.
Access equity: If you’ve been making payments on your mortgage for a while, you may have built up some equity in your home. Refinancing your mortgage can allow you to access this equity, which you can use to fund home improvements or pay off other debts.
Consolidate debt: If you have high-interest debt, such as credit card debt, refinancing your mortgage can be a good way to consolidate this debt into one manageable payment. This can help you pay off your debt faster and save you money on interest payments.
Disadvantages of Refinancing Your Mortgage
Fees and charges: Refinancing your mortgage can come with fees and charges, such as application fees, valuation fees, and discharge fees. These fees can add up and may outweigh the benefits of refinancing.
Longer mortgage term: Refinancing your mortgage can result in a longer mortgage term, which means you’ll be paying off your mortgage for a longer period of time. This can increase the total amount of interest you pay over the life of your mortgage.
Risk of variable interest rates: If you choose a variable interest rate when refinancing your mortgage, your interest rate could go up in the future. This can increase your monthly mortgage payments and make it harder to budget.
Is Refinancing Right for You?
Whether or not refinancing your mortgage is right for you depends on your individual circumstances. If you’re considering refinancing, it’s important to consider the costs and benefits carefully. You may want to consult with a financial advisor or mortgage broker to help you make an informed decision.
If you’re looking to lower your monthly mortgage payments or access equity in your home, refinancing may be a good option for you. However, if you’re planning to sell your home in the near future or you’re already a few years into your mortgage, refinancing may not be worth the cost.
While lenders offering lower interest rates to new borrowers can be tempting, it’s important to carefully weigh the costs and benefits of refinancing your mortgage. Even if interest rates have been rising, refinancing may still be a good option if it can help you save money or achieve your financial goals. Be sure to consult with a financial professional to determine the best course of action for your specific circumstances.
Call Origin Now on 1300 30 67 67 or fill in the form on this page to see what your options can be.
Doug Daniell – CEO – Origin Finance