When is the best time to refinance my mortgage?
The short answer is: Whenever it makes financial sense to do so.
The lending market is so vibrant and flexible these days. It has really opened up the ability for people to change their lending arrangements depending on a whole host of circumstances.
Not so long ago people got a mortgage for 25 to 30 years and doggedly stuck with it until paying it off. Well, let me tell you that in recent years that has dramatically changed.
Did you know that the average duration for a home loan in Australia is only 4-5 years.
That’s not because people are really rich and paying them off in that time – it’s because people refinance their mortgage into another lending product.
The number one reason people refinance is to get a better deal.
With the massive increase of competitiveness within the lending market consumers now enjoy the ability to shop around for price. Don’t be afraid to move your business.
You may have heard the saying “Old money verse new Money” – the banks offer better rates for new business. Loyalty is out the window so move with the times.
As time passes your lifestyle changes as do your financials and your circumstances.
A different banks policy may now suit your needs better than the lender your with.
Investment to Owner Occupied – A classic example here is someone who had an investment property that they are now living in.
Divorce – There’s also divorces and partnership splits that fit this space. You may need to refinance to release people from property titles and such like.
Married – merging your assets together
Release Guarantors – You may have had security guarantors that are no longer needed. That is a great time to find out whats out there.
Equity – An equity release is a very common one that we work with for our clients. Refinancing to release the equity that has built up with capital growth to use for another property purchase, renovations and upgrades, or just to have liquid funds as a means of protecting yourself for possible unforeseen future risks.
Through the lifetime of a loan you also need to be aware of changes in the market.
The market is a fluid landscape that is always changing depending on a multiple of forces. Some are sudden like the GFC or others are gradual like sustained increased property prices.
Different governing laws and regulatory policies change the way banks can lend and then there is the reserve bank managing the economy and using interest rates to try and control it.
Being aware of changes in the market can open up fantastic opportunities to refinance into products that suit the current conditions better rather than holding and praying.
So don’t think you’re locked into a loan with no options if things change. Be flexible.
Do your sums or use a team that’s working in your interests as there could also be some costs and fees involved.
Banks can also try and make it difficult if your leaving them so it’s much easier to remove yourself and use a broker to work through the process and do all the paperwork for you.
The bottom line is: ONLY refinance when it makes financial sense to do so.
And if it does…Go for it because it could save you thousands.
The best thing is to be aware and informed.
If you need more personalised information on your situation Call Me on 1300 INK 000 (1300 465 000).
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The information provided on this video has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of an Ink Wealth Pty Ltd advisor before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Ink Wealth Pty Ltd nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.
Katherine Therese Euers is a Credit Representative (497712) of Vow Financial Pty Ltd, ABN/ACN 66 138 789 161, Australian Credit Licence 390261