Refinancing is where you take out a new loan to replace your existing home loan, either with the same lender or by switching to a new lender.
You might consider refinancing if you;
- Are paying too much for your current loan
- Want a lower interest rate
- Want a loan with more features such as redraw or an offset account.
- Want to use the equity in your home to renovate or improve your lifestyle
- Want to consolidate other debts into your mortgage.
Steps to refinancing
The first thing to do is to look at your current loan including the type of loan it is, the interest rate you’re paying, the features it offers and the fees you’re paying and identify the things you would like to improve with a new loan.
You can then compare it with other loans on offer to find a better deal. Remember to factor in any costs associated with exiting one loan and taking out another.
The best way to check your potential savings is with a refinance home loan calculator.