What to first consider
When refinancing CAN make sense
- Your lender’s rate isn’t staying competitive with others in the market
- A major change occurs in your financial situation
- You are looking for more money to pay for home renovations, a child’s education costs, or invest in another property
- Switching to a fixed rate at an opportune time
- You’ve started to see large credit card debts and want to consolidate
- When it might NOT make sense
- You might not own the property for much longer
- Prepayment penalties are high on exiting home loan
- Since your previous loan your credit history has taken a hit due to outstanding debts, making it less likely you’ll get a good rate
- You’ve got an uncertain income over the period of the loan, such as work as a freelancer
- Your loan balance is low and you’re not thinking of redrawing on available equity
- Before refinancing, a borrower should consider their circumstances over the next three years. You should ask yourself whether flexibility, a lower rate, lower fees or debt consolidation is the goal.