Finance Tips: How to refinance your home loan
By Advantage Property | 3rd Apr 18
Understanding your financial situation can help you excel in property
Understanding your home loan is important but research tells us that up to 85% of Aussies do not know exactly what their interest rates are. For a huge investment, this is surprising to us, so if you are serious about making money from property, we urge you to read on.
Not understanding how your loan is structured or what your interest rates are means you may be missing out on an opportunity to save thousands of dollars. Over the life of a loan, you may be in the position to refinance your loan with a different lender or structure for a cheaper rate, which will save you money in the end.
Do your numbers!
Number crunching is not a lot of people’s favourite pass time activities but it is essential to being a successful investor. You need to know with confidence where your money is being spent in order to find ways to reinvest! Many people set and forget – this is dangerous because there are often ways to maximise your return on your investment by keeping an avid eye on the property and financial market.
Speak to your bank or your mortgage broker and just like health insurance, you may be surprised with the various products and loans that are available to you. Switching loans can shave the interest rate percentage – this potentially can save you thousands of dollars. Yes, it might take you some time and yes, it will take some concentration and effort, but the result is the potential savings you can make.
Read the fine print
Ok, no one said investing in property was truly effortless! To put it in perspective, you are spending hundreds of thousands of dollars so it is essential you read the fine print! With every loan promotion, there is always fine print to read which lists out the various terms and conditions of the loan.
Most of the time the advertised price is an introductory offer, which means after that period has lapsed, your home loan will increase according to the terms and conditions. Ensure you evaluate the costs involved over a long period to get the best outcome for your situation.
If you need to switch lenders to get a better rate, get all your paperwork in order. If you want to expedite the process, we recommend having all your documents ready. Again, review all the paperwork and fine print!
The beauty of refinancing your loan is that the money you save from your repayments can be put straight into your home loan as additional payments. What this does is it saves you more money overall.