Are you thinking about refinancing your home loan? If you have a mortgage, you’re probably always on the lookout for ways to save money, and if refinancing has crossed your mind, you aren’t alone. In the last 12 months, we’ve seen a huge spike in the number of Australians who are refinancing their mortgages. And with interest rates on the rise, now might be a good time to lock in a lower rate. But before you make any decisions, it’s important to carefully consider your financial situation as it stands today and also get crystal clear on your future financial goals.

Why refinance your home loan?

There are a few reasons why you might want to refinance your home loan. Maybe you’re looking to consolidate your debts, possibly you want to take advantage of a lower interest rate or even the current rate before the much-anticipated ongoing rises… or it could be you’re looking for a different home loan product with features like offset accounts or redraw facilities.

Whatever your reason for considering refinancing, it’s important to make sure that you’re getting a good deal. Here are a few things to consider when coming to a decision:

How much will refinancing cost?

The costs of refinancing can vary depending on your lender but be aware in some cases, the fees to refinance a mortgage can be as high as a few thousand dollars. Yes, that seems like a lot of money, but if you’re able to lock in a lower interest rate, it could end up saving you thousands of dollars in the long run. And if you’re consolidating your debt, it could help you become debt-free sooner. Be sure to ask about all potential fees and charges before making any decisions.

How long will it take to recoup the costs of refinancing?

This depends on a number of factors, including the difference between your old interest rate and your new interest rate, as well as how much debt you’re refinancing or consolidating. But as a general rule of thumb, it usually takes between two and five years to recoup the costs of refinancing. So if you think you’ll be in your home for at least that long, it could be a smart idea to explore your refinancing options.

What is the current state of the housing market?

If you’re thinking about refinancing in order to access the equity in your home, it’s important to consider the current state of the housing market. This is because if property prices have gone down since you bought your home, you may not have as much equity as you think, and that could affect how much money you’re able to borrow. So if you’re unsure about the current state of the market, it’s a good idea to speak to us or another professional such as a real estate valuer, before making any decisions.

What are your long-term financial goals?

Before deciding whether or not to refinance your home loan, it’s important to think about your long-term financial goal, both for yourself and for your family. Are you looking to become debt-free sooner? Are you hoping to send your kids to a private school or uni? Or have you got your hopes pinned on retiring early? Whatever your goals may be, be sure to factor them into your decision before moving forward with refinancing.

Now might be a good time to refinance your home loan for several reasons. Interest rates are on the rise and are expected to continue to rise in 2023, and this means that if you have an adjustable-rate mortgage, your payments could go up significantly in the next year or two. Refinancing now could help you lock in a lower interest rate and save you a sizable amount of money in the long run. Additionally, many lenders are currently offering competitive deals on refinanced mortgages, so it’s worth shopping around to see what’s available.

So, if you’re thinking about refinancing your mortgage, reach out today to us at Grow Financial Solutions! We’re more than happy to have an obligation-free chat about whether now is a good time for you specifically to refinance given current market conditions, as well as answer any questions that this blog post may have raised for you about refinancing.