More than a million Australians have refinanced in the last 12 months, so if you’re worried that you missed the opportunity to reduce your mortgage payments due to a six-month streak of interest rate increases, experts say it’s still not too late.
The head of research at property settlement platform PEXA, Mike Gill, claims that another 2.28 million Australians are considering refinancing in the next two years. PEXA reckons that those who have already refinanced are currently saving $1524 a year on average.
According to Gill’s research, 71% of mortgage holders are concerned about the possibility of increased interest rates, 49% are concerned about their employment or financial stability, and 73% regularly compare their interest rate to market trends.
It’s critical that customers understand they still have time to switch lenders and reduce their monthly payments before interest rates rise further, Domain Home Loans CEO Kareene Koh says. Otherwise, they may feel discouraged and worry if they’ve left it too late.
Despite the fact that rates have increased significantly over the last six months, she predicts that this trend will persist. It’s crucial to perform a financial wellness check, and if you can refinance, hunt for a lower rate
Why it’s still possible to end your relationship with your bank:
Rates are anticipated to continue rising.
Despite the Reserve Bank reducing the rate increase pace last month, increasing it by 0.25 percentage points rather than 0.50, Westpac has predicted another 0.50 percentage point rate increase for November.
As a result, the cash rate would be 3.1%, which is a full 3% more than rates were just seven months ago.
An individual with a $500,000 variable loan is currently paying $742 more per month than they were before to the increase in interest rates. Homeowners will again pay an additional $151 per month if rates increase by another half-percentage point.
Homeowners may be able to save hundreds of dollars by moving to a lower rate, even one that is just 0.5% lower than what they are currently paying. “Your rate isn’t going to go down if the RBA rates are going up.”
Estimates are based on a principal and interest loan with a 30-year term. Charges and fees are not included. Information is simply meant to be a reference.
You might obtain a rate that is more appealing.
When a homeowner chooses to stay with their present bank, they run the risk of incurring a “loyalty tax” (the cost of doing business with them rather than going elsewhere) without realizing it.
Simply because they are a new customer, banks frequently treat them better than long-standing clients who pay on time and have a solid credit history.
If your current lender hasn’t “checked in” to see if there are any savings to be had, this is a hint that you should be looking into your options to see if there are any lenders offering more affordable rates, one of the expert says. “This is a wonderful reason to not stay loyal to your bank,” the expert advises if the customer’s bank has never phoned to lower the rate. “If you wait much longer, you’ll continue to pay the higher rate.”
Fulfill personal and financial objectives
Over the course of a loan, a homeowner’s priorities frequently shift. Looking into different possibilities and moving to a loan with characteristics that fit their needs, such fixed interest rates, may result in long-term financial savings.
Furthermore, refinancing gives homeowners access to the equity they’ve generated in their properties, which they can use to finance renovations, a down payment for an investment property, or the purchase of a car.
To achieve financial or real estate goals, it might be worthwhile to refinance to see if equity can be accessible. When refinancing, lenders normally permit homeowners to borrow up to 80% of the value of their property. Accordingly, depending on the residence, the equity that is available might be in the hundreds of thousands.
Improved features and benefits
When a homeowner switches to a new lender, they frequently reap the benefits of being a new customer. A variety of lenders provide additional incentives, such as cash-back offers, in which you receive money back when you take out a loan.
The cash-back amount could be a percentage of the loan amount, such as 2%, or a fixed amount, such as $2000.
“There is never a bad time to do something,” Abel says. “Don’t keep waiting while you’re being charged more than another bank would.
“Schedule a meeting with your broker to discuss your current loan situation and see if a better rate and rebate can be offered than you currently have.”
Reach us on info@real-mortgage.com.au or 047 044 0347 so we can help you and do the leg work while you sit back and relax