Refinance An Investment Property
Have you reviewed your home loan recently? The official cash rate in Australia is on the march, but what does this mean for you?
Now is the time to review your loan to see whether it is still right for you.
Home loans are no longer a set and forget product. At Time Home Loans, we recommend you review your home loans annually – or every two years at a minimum.
While rate is important, how you use your loan and the way it is structured is vital and will save you in the long run.
With access to over 30 banks and hundreds of different loan products we work with you to find the loan that suits your individual circumstances.
Why should you refinance?
Reviewing your home loan every year or two is a good habit to get into.
As the market and your circumstances change, the home loan that was right for you then, may no longer be one that suits you now. You may be looking to save a bit of money, consolidate your debt or unlock some equity you’ve built up in your home. Whatever your reasons are, it’s a good idea to see what’s out there on a regular basis. But you should also bear in mind the long term costs of increasing your borrowings.
Lower Rates and Fees
Obviously the first question to ask is, could you be paying less? A loan with a lower interest rate or less fees can be the simplest way to reduce your repayments. It means you can unlock a little more spending money, or better still, pay off more of your principal to pay the loan back sooner.
More Features
But it’s not all about interest rates. Sometimes the loans with the lowest rates also sacrifice features that are not only handy, but also save you money in the long run. For example:
- Offset account. This is a separate account that lets you use the balance to offset the principal on which your interest is calculated. Simply having your pay packet deposited into this account can take time off your loan.
- Flexible payments. Paying some more money into the loan if you have it is a great way to shorten your loan and save more in the long run.
- This lets you easily access any extra funds you’ve deposited into your loan.
- Flexible rates. Depending on what you think rates are going to do (go up, down, or stay the same), you can choose the type of loan that could save you money when they go down, or protect you if they rise.
Of course each lender will have its own terms and conditions, and it is important to consider the effects of these rules when choosing a loan.
Refinancing to renovate
One of the most common reasons to refinance is to renovate.
If you’ve owned your home for a while and its value has increased, you may be able to use this equity to fund your improvements. An added bonus is that if you renovate well, you could potentially add more value to your property. If the extra funds for the renovation are put into an ‘offset account’, you may be able to avoid paying interest on the renovation funds until you start using them.
You could also consider a ‘line of credit loan’ which is essentially like a credit card with a bigger limit and usually much smaller interest rate. These funds are available to draw down on as you undertake your renovations, and you only pay interest on the amount you’ve used.