After a few months stuck at home, you’ve probably put a lot of time to good use; whether it’s dusting off your application for MasterChef 2021, ticking off the last item on a long and overdue to-do list, or perhaps you just hid in a couch fort and trawled the darkest corners of Netflix (really, Fuller House?)
Refinancing might be the last thing on your mind with everything that’s happening, but here are five solid reasons why it should to be first.
1. You can (most likely)
You might not even be aware you could do it. But since many home loans are refinanced with the intention to save money, the timing could be better than ever.
However, while that might sound too good to be true, the decision of your bank or lender will be based on your eligibility for refinancing. So, for a lot of Australians facing job loss or reduced hours, now may not be the best time. But if you have had minimal financial impact from COVID-19, it’s worth a look.
2. Lockdown the low rate
In 1989-1990 (when the original Full House aired – you probably ‘never saw that’ either), home loan interest rates hit an all-time high of 17 per cent a year.
At the time of writing, the Reserve Bank’s official interest rate is the lowest it’s been in 60 years, at just 0.25 per cent.
There is no doubt that COVID-19 has delivered a serious financial blow to many homeowners. However, now could be the time to take advantage of the lowest rates in Australia’s recorded history and start saving big bucks.
3. Help with cash flow
It is a pretty unpredictable time financially, and while a few months off expensive cocktails, fine dining out and new threads to show off have helped, there are always other ways to keep on track.
Perhaps you’d like to release some equity to have some cash on standby? You might continue the lockdown into renovation mode. Plus, domestic and international flights will reopen and if anyone deserves a holiday in 2020, it’s absolutely everyone.
Or you could want to consolidate your debts into your home loan, reduce your repayments and – likely – interest on credit cards or personal loans.
Speaking of cash, cash-back offers can be tempting – but be careful of low-hanging fruit and take into account other factors like ongoing rates, reputation and even customer service.
4. Make sure you’re on the right loan for you
You’ve probably stumbled on enough dating reality shows recently to know that not everything’s a perfect fit – and the same goes for you and home loans.
You could be on a variable loan and want to take advantage of the current low fixed rate.
You might want to access different features or flexibilities of a loan that you currently can’t, such as extra repayments without penalty. Or your bank or lender just isn’t wooing you the way you deserve
Whatever your reason, it might be time to make the move to a different home loan.
5. You’ve never refinanced – or haven’t in a long time
If you’ve had a home loan for a while and never refinanced, turn off Netflix immediately. Because studies show 58 per cent of Australians spend about the same time watching an episode of their favourite show as they do inspecting a property.
If Australians are putting that little effort into finding their dream home, imagine how little they’re putting into choosing their loan. Refinancing and saving thousands can even be done on the couch when you’re not in charge of the remote.
The five reasons above are all worthy considerations, but the main one is just to make sure you’re not being taken for a ride. It quite literally pays to look around. It turns out all that time locked down at home might’ve been the perfect time to start saving on it.
Please be aware that you should always consider getting mortgage or financial advice first and be aware of the potential downsides. Talk to your broker or ME for a full list of potential risks and rewards.
This article originally appeared here.
This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.