Reaping the benefits of refinancing


The lengthy period of interest rate cuts has provided a boost to the number of people refinancing their loans. has revealed the results of research that shows 35 per cent of all owner-occupier home loans financed each month are now refinanced, and the numbers are tipped to grow again this year.

Using a mortgage broker can be most important when trying to reap the benefits of refinancing loans. 

When you refinance your loan, you are replacing a home loan with a new one over the same asset. There are three situations where people can look to refinance: 

People who want to find a cheaper loan

For people that want to find a cheaper loan, now is a good time. It’s a super-competitive home loan market and rates have fallen significantly. Finding a better home loan deal (for example one with bonus features like an offset account) and cheaper rate can save people a lot of money.

Those looking to pay off consumer debt

Refinancing to eradicate consumer debt can also pay handy dividends. Credit card debt has not fallen in line with the cost of mortgages and if your property’s value has risen over the last few years you can refinance to a larger loan and use the extra cash to pay off your consumer debt.

Effectively you would be paying off a debt that is being charged interest at around 18 per cent with a new debt that is only being charged 4.4 per cent. There can be huge savings for someone who refinances in this way. 

People who want to use the equity in their property to fund property investment or home renovations 

Using the equity in your home can be one way of raising the finance to buy an investment property or pay for home improvements.

If for example you bought a property for $500,000 a few years ago with a $400,000 loan. You’ve paid the loan down so far to $300,000 and the property’s value has jumped to $600,000. If you get an 80 per cent loan valuation ratio on your property your new loan of $480,000 will pay off the remaining $300,000 and leave you with $180,000 of leftover available finance to buy your investment property.

Contact Perry Finance today if you’re thinking about refinancing your loan to capitalise on one or more of these refinancing strategies


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