Refinancing| The Rules of Engagement
With a seemingly endless series of rate hikes at the moment, there’s cause for many Australians to consider for the first time in the life of their home loan if they wouldn’t be better off with a different lender. In many ways, the need to review your loan is a beneficial process to go through, but it can be a little tricky to know exactly what you’re looking for.
Whilst the main reason to refinance is to save money, the answer to doing so isn’t always in finding the bank with the lowest interest rate.
Here we’ve prepared several items to consider in weighing up whether to refinance or not. In working through this list, the answer might well surprise you.
A loan term from fixed to variable
There are nearly $44 billion of fixed-rate mortgages due to expire by the end of this year. That reality will prove a real challenge for many Australians who will revert to variable interest rates and immediately pay significantly more interest rates costs. Staying with your current lender could prove more costly than if you were to look elsewhere.
To help you with this decision making process, check out our video, and blog for more insights -https://www.astute.online/news/to-fix-or-not-to-fix-the-2022-question
Does your bank charge you a lot of ‘fees’?
It’s often the little costs that add up throughout your loan. Review your bank statement to see if you’re being charged for:
● Account fees
● Package fees
● Redraw fees
● Early payment costs
● Fees to switch to another lender
How flexible is your home loan for your needs?
It may well be that your current lender doesn’t provide a redraw facility. Again, this feature becomes important due to the missed opportunity cost of being able to store savings in your home loan account and save the interest cost.
Equally, if you suddenly find that you have a major plumbing issue that needs repair or need access to funds for a medical reason, it may well be that you’re limited in your ability to withdraw any ‘over payments’ that you've been able to make previously.
Too often this feature is undervalued. Look at it this way, if you save money in a high interest account, you will have to pay tax on the “earnings”. Saving interest on your home loan has no further tax implications…so the benefit could definitely be worth considering..
Is now the right time to look at refinancing?
If you’re a client of ours, we review your situation approximately every 12 months. That said, we’d encourage you to reach out of any of the above is of concern for you as it's possible that your own needs have changed, and it might be a good idea to review our situation and goals together sooner. With your permission, we can act on your behalf to prepare an obligation-free recommendation.
One final thought
It’s worth noting that we work for our customers, and our commitment is to ensure that we find you the best possible refinance scenario for your circumstances. If we get through this process and find that your current lender is the most appropriate for your needs, rest assured that we will happily recommend no change.
But for us, there’s no harm in making the enquiries, and we’ll gladly do so for our customers as we navigate the current financial terrain!
Astute Financial Management Pty Ltd | ACN 093 587 010 | Australian Credit Licence 364253 | Davgan Insurance & Wealth Pty. Ltd. T/As Astute East Brisbane Corporate Authorised Representative (425641) of Alliance Wealth Pty Ltd | ABN 93 161 647 007 | AFSL 449221. www.centrepointalliance.com.au/aw | General Insurance provided by Astute Insurance Pty Ltd | ABN 59 622 582 236 | Authorised Representative of Ausure Pty Ltd ABN 94 096 971 854 AFSL 238433. Health Insurance products are underwritten by St Luke’s Medical and Hospital Benefits Association ACN 009 479 618 (St.LukesHealth), a registered private health insurer, [trading as Astute Simplicity Health] and members are introduced by Astute Financial Management Pty Ltd or related entities (collectively known as Astute) for which Astute receives a commission.
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