4 questions to ask before refinancing your home loan
Are you looking to refinance your home loan? Before you jump the gun, here are a few questions you might like to ask yourself.
Q1: Why am I refinancing?
The most important question is: Why?
Having a clear understanding of what you want to achieve will help you figure out if refinancing is right for you, and if it is, what kind of loan you should look for.
Some things to consider:
- Do I want a lower rate?
- Do I want to pay less in fees?
- Do I want extra features such as an offset account or a package deal?
- Am I consolidating other debt with my home loan?
- Have I applied for credit recently?
- Have my circumstances changed?
- What are the costs of refinancing?
- Can I get a better deal from my current lender?
Q2: What is my credit score?
Your credit score is an important factor (but not the only one!) in deciding the outcome of your home loan application. If you have black marks on your credit file or you’ve missed some repayments in the past, this could lower your credit score and prevent you from being approved for credit.
Research by Experian shows that just one missed credit card repayment in the last three months can lead to a 22% drop in your credit score. That’s why it’s more important than ever to make all your repayments on time.
Savvy Tip: You can check and monitor your credit score for free at Credit Savvy!
Q3: Can I get a better deal?
With the cash rate at an all-time low, now is a great time to compare home loans. Let’s say you have a $400,000 home loan with an interest rate of 4% p.a. over a 30 year term. If you decrease your rate by 25 basis points to 3.75% p.a., your repayments would decrease from $1,909.66 to $1,852.46. That’s a difference of $57.20 a month or $686.39 a year. Check out our home loan comparison calculator to do the sums on your mortgage.
If you’re ready to start comparing home loans, head over to the home loan comparison service and find out if you can score a better deal.
Q4: Should I talk to an expert?
If you’re looking to refinance but you’re not sure where to start or you have some questions, you can consider talking to an expert. Request a free appointment with an eChoice mortgage expert today.
Want to learn more about refinancing? Head over to the Learning Hub and get started today.