Some people think refinancing simply means switching your home loan from one bank to another.
And while refinancing your home loan to get a better deal is certainly a good reason to switch, there are plenty of others too.
You’ve seen a better deal at another bank
Most people think the interest rate is the be-all and end-all of home loan appeal. It’s important, yes, but not as important as the ‘comparison rate’.
Wherever you see an interest rate advertised you should, by law, see the comparison rate. Think of it as the effective, or true, interest rate as it considers the fees you’ll pay on the home loan. Aside from price, people often refinance their home loan to give them more flexibility.
Some home loans restrict the amount of extra repayments you’re allowed to make without penalty. Others do not. Some home loans charge you a fee to redraw the extra repayments you’ve made if you need them. Others do not. And some home loans may require you to repay the loan over a shorter period meaning the repayments are higher. Other may offer you a longer term with lower repayments. A better deal is about more than price.
You're looking for better service in a bank
People are increasingly reliant on online banking these days. Despite this, we’re sociable creatures who need to ‘feel the love’ from a fellow human from time to time.
Personal service (or lack of) is one of the main reasons banking customers decide to switch banks, taking their home loan with them. And why not? Home loan customers are in high demand in the finance industry. You should feel appreciated.
You’ve got your eye on a big-ticket item
Refinancing isn’t always about switching banks. If you’re happy with your bank you can refinance your home loan and stay put.
Why would you do that? You might need to do some renovations, you might have your eye on a new car, a dream holiday, your kids’ education, or a thousand other reasons for which you need extra cash. If you’ve got equity in your home (equity is the difference between what your home is worth and how much you owe), refinancing can unlock that equity for all kinds of purposes.
For big ticket items it’s often cheaper to refinance your home loan than to take out a personal loan at a higher interest rate.
Multiple debts are stressing you out
Credit cards, personal loans, overdrafts, oh my! For some people juggling multiple debts is a choice. For others it can be a stressful burden.
Refinancing can offer a simpler and often more affordable solution. Refinancing can allow you to consolidate your debts so you need only manage your home loan repayments. And, because credit cards and other loans often come with higher interest rates, you can save money by paying these debts out with your home loan.
Take a moment to consider your situation. Is it time to look for a better deal or better service? Is there something big on the horizon? Does consolidating your debts make sense?
If you’ve answered ‘yes’ to any of these questions, chat with your Bendigo Bank home loan specialist who will happily guide you through the refinancing process.