Have you noticed that more and more people are refinancing their home loan?

In fact according to the Australian Bureau of Statistics (ABS) there is somewhat of a boom taking place right now, with a record number of home owners refinancing their home loans.

It is estimated that almost 40% of all new home loans written are for refinancing, with some major lenders reporting that the number of home loans written for refinancing has overtaken home loans written for a new property purchase.

Many people now have a regular cycle of reviewing their home loan and refinancing regularly.

Gone are the days when banks could rely on the apathy of Australians to not move their home loan.

Switching home loans can still be a daunting process, so what is the big attraction?

What is home loan refinancing?

Refinancing is the process of switching your home loan to another product with a new or existing lender.

People most-often do this to achieve a lower interest rate.  Other common reasons for switching include a change in living arrangements such as a growing family, or accessing more features to future-proof your situation in uncertain economic conditions.

Refinancing begins with an annual review to assess your personal and financial situation, and comparing what home loans are available on the market to ensure you are still in the best position.

Before you consider refinancing, why not ask your existing lender? They may be able to assist you without the hassle of rebudgeting your day-to-day finances.

Time for a great deal

Following a clamp-down on investment lending and with interest rates at historic lows, competition is fierce amongst lenders for your new business.

Thanks to heavy marketing, we’ve all been groomed to shop around and with great deals to be had more of us are willing to do so.

However a home loan is the largest financial decision most people will ever make in their life and being spoilt for choice is often a hindrance than a help.

That’s why people are turning to independent non-bank lenders and mortgage brokers for a trusted discussion and personalised service to help make sense of their home loan options available.

This in-turn has created more competition in the home loan market, with non-bank lenders and mortgage brokers now writing a large volume of new home loans.

A non-bank lender will:

-          Listen to your story and ask questions.

-          Offer you a good spread of home loan products.

-          Tailored them to your individual needs.

-          Explain different borrowing scenarios.

-          Make a number of recommendations.

There’s never been a better time to save, simply by asking for a better deal.

Related Reading: ‘A quick look at bank versus non-bank home loans’

Make the switch

Reviewing your home loan is not an arduous task anymore.  But if you’re looking for inspiration, here are the main reasons people refinance their home loan.

Cheaper interest rate

Most people refinance their home loan simply because they want a better interest rate.  Conducting a yearly review of your current home loan position against what’s available in the market is a good idea.  As life gets more complex, a review should include a discussion about what the future may hold, personally and financially.

A fixed interest rate strategy will provide budget certainty and a variable interest rate strategy will provide more flexibility.  Splitting your home loan between a fixed and variable interest strategy will provide the best of both worlds.

As a tip, if a new interest rate deal has lowered your repayments keep making your existing repayment amount.

Change of lifestyle

Many people improve or renovate their home because the family is expanding or they want to increase the value of the property.  Accessing the additional finances and features required to do this e.g. construction repayment terms, is a great excuse to review your overall home loan position at the same time.

There are now a number of innovative, flexible home loans worth considering if you are renovating and building.

Consolidate debt

Australians love to buy things on credit, perhaps the most expensive way to access money.  Given the general rise in property values across Australia, it is increasingly popular to use available equity in the home to consolidate high-interest unsecured debts at a cheaper rate and manage these under one loan.

As a tip, keep making the same repayment amounts to your home loan even though technically your repayment amount for the consolidated debts has reduced.

More flexibility

As life becomes more complex, the need for flexibility is important.  Accessing additional features can provide more control if people feel their circumstances may change in the future.  Popular features include:

-          Interest-offset account.

-          Repayment holidays.

-          Flexible repayments.

-          Lump-sum repayments.

-          Redraw facility.

-          Portability.

-          Interest rate and fee options.

Financial stress

With people taking larger home loans and the cost of living continuing to increase, household cash flow is getting tight.  If you’re feeling the squeeze, refinancing to re-extend the term of your home loan and reduce repayment amounts may be an option worth discussing.  A simple, cheaper home loan may be more appropriate.

Related Reading: ‘Unlock your home loan and save. Here’s the key’

Unlock your financial freedom

In a sea of opportunity, there is no reason for accepting higher interest rates or a home loan that doesn’t meet your needs.

Getting into the habit of reviewing your home loan more often is financially worthwhile.

It pays to shop around and the ability to access high-quality independent help has been a significant game-changer in the home loan market keeping many borrowers ahead.

Speaking to someone independent can improve the review process for you.

These are real people wanting to hear your story and present a range of tailored home loan solutions best-suited to your individual circumstances.

Are you ready to rethink your home loan?

A simple conversation about your home loan could improve your financial position and lifestyle at the same time.

At Loan Avenue we know one size doesn’t fit all.  It pays to have a conversation with a real a person who wants to hear your story and run through some different scenarios with you.

It’s just one of the many features and benefits included in a tailored home loan from Loan Avenue – affordable home loan solutions for everyday Australians like you.

Let us show you.  To make an appointment with one of our experienced and accredited finance professionals call 1300 56 26 28 today or leave a message here.