Millions of Australians opt for mortgage refinancing nowadays because they want to take advantage of the very attractive interest rates. Refinancing proved to be a solution for the people who owed more money on their mortgage than their home’s actual value.
But how do we know whether or not it’s the right time for mortgage refinancing? Well, here are a few tips to get you started on that:
1. Compare Interest Rates
The reason you are refinancing is that you want to save up on your monthly payments – so going for something with a higher interest rate might not be the smartest move you could make. The first step towards mortgage refinancing is comparing the interest rates. You need to find out whether or not it’s worth making the change. If the drop is significant, then it is the right time to refinance your mortgage.
2. How Long You’ll Be Living There
Do you plan on living a long and happy life in that house, or do you want to sell it in the years to follow? Since there will be several closing fees on the mortgage, you ought to think if you’ll stay long enough for the second mortgage savings to equate those fees. If you aren’t, then mortgage refinancing might not be a very good option right now.
3. Check the Penalties
There are loans that come with penalties if you want to make early repayments – and that will add a lot of money to the overall cost of the refinancing. If your current loan has such a penalty, then refinancing might not be a very good idea for you. It may only be a good option if you stay long enough for the savings on the new mortgage to cover the penalties of the old one.
4. Consider How Far Along You Are
If you’re in the first few years of your mortgage, then you’re most likely taking advantage of the lowest rate possible. Once their introductory period passes, your interest rate will start growing, which is why you may want to look for refinancing at that point.
On the other hand, if you are still in that introductory period, then you may not see an actual difference from the change. Wait for the initial rate to expire, and then consider mortgage refinancing.
5. Consider the Terms of a New Loan
Times are changing, so a loan that is attractive right now may not be as attractive as a loan you’ll find ten years later. If you find a mortgage option that offers more benefits than your current one, don’t be afraid to go for mortgage refinancing.
Talk with your financial advisor. You can even go on websites such as www.nswmc.com.au for help – or even check out their services. If you want to make a change, you’ll surely find something convenient for you there. They will surely tell you if a mortgage refinancing is the right option for you or not. If you have a large loan, it will come in handy and save you a lot of money – so keep an eye out for a good opportunity to refinance your mortgage.