Should you consider refinancing your home loan?

It’s a good idea to do a health check on your home loan every 12 months to make sure it’s still helping you to meet your financial goals. Reviewing your home loan and seeing what options are available to you will help to keep you on top of your finances and could potentially save you thousands over the life of your loan.

While many people look to refinance for a better interest rate, refinancing can also be a great option if you want to consolidate debt, access equity for renovations or buy a new car. We’ve put together a step-by-step guide to help you decide whether refinancing is the right choice for you and find the home loan that meets your needs.

Step 1: Review your home loan

Do you know the current interest rate on your home loan, the fees you pay and your repayment amount?

One of the best things you can do is assess your current home loan and compare with other products on the market to see if it’s worth refinancing. A lower interest rate or a reduction in fees could make a big difference in the long run, so taking time to review your loan and find a better deal is often worth it.

Step 2: Compare home loan options

Once you’ve established your home loan costs and your current interest rate, it’s time to compare this against other loans. By checking out the competition you will get a good idea of where you sit in the market and whether you can save over the life of your loan by refinancing.

There’s a range of options to consider, such as variable rate loans, fixed rate loans and even split loan options. You will also need to decide whether you want a product with all the bells and whistles or a no-frills home loan. Do you want an offset account, the ability to make extra repayments, a credit card or redraw facility? Only choose the things you need, as you don’t want to pay for extras you won’t use.

Check out our home loans and compare to see if there’s a product that’s right for you.

Step 3: Take a closer look at the fees and charges

It’s important to consider any costs associated with exiting your current home loan and switching to a new loan. Costs such as the settlement, loan establishment, exit and mortgage registration fees and charges can add up so you should make sure the long-term benefits of refinancing outweigh any fees.

Consider whether you’ll have flexibility of repayments, if you will need Lender's Mortgage Insurance (LMI), length of the loan, and whether you’ll be protected against interest rate rises.

Step 4: It's time to switch

Once you’ve determined refinancing is the right option for you, it’s time to make the switch by contacting your preferred lender. If you choose to go with BCU Bank, we can walk you through the details of your home loan selections to make sure you fully understand the benefits of each loan and any costs.

Once your application is approved, we’ll pay out your previous home loan and your new one will begin. While it might be tempting to reduce your repayments after you refinance, try to keep your repayments at the same level so you can pay your loan off sooner.