Refinancing a mortgage typically occurs for two primary reasons:

The first, Lowering Your Interest Rate:

One of the main reasons people refinance their home loans is to take advantage of lower interest rates. If you have held your home loan for some period then you may find the rates your current lender has you on are no longer competitive with the market, or if market interest rates have dropped since you initially obtained your mortgage, refinancing to a new loan with a lower interest rate can result in significant savings over the life of the loan.

Lowering your interest rate can lead to reduced monthly mortgage payments, allowing you to allocate those savings towards other financial goals or expenses. Or by continuing to make the same monthly payments, you will find yourself paying off you home a lot sooner.

The second reason to refinance is, Improving Your Cash Flow:

Refinancing can help improve your cash flow by restructuring your loan terms. This can involve extending the loan term to lower your monthly payments, providing more breathing room in your budget. By improving your cash flow through refinancing, you may free up funds for other priorities such as savings, investments, or paying down high-interest debt.

These two main reasons for refinancing are often intertwined, as lowering your interest rate can directly impact your cash flow by reducing your monthly mortgage payments. However, refinancing decisions should be carefully evaluated based on your individual financial circumstances, goals, and the costs associated with obtaining a new loan. Additionally, it’s essential to consider the potential long-term benefits and trade-offs of refinancing before deciding.

Consulting with a financial advisor or mortgage specialist can help you determine whether refinancing is the right choice for you.

Simply head to www.rehl.com.au to book an appointment to discuss your options today.