What are the Benefits of Refinancing? There are many benefits to refinancing your home loan. These can vary from borrower to borrower, depending on their current situation. Benefits include the following:
Use excess cash for an investment property through home equity lending where you can borrow up to 80% of your existing home’s value.
Converting a portion of your mortgage into a line of credit or offset account, which provides for easier access and more flexibility in managing your finances.
Reducing interest payments via a lower interest rate on the new loan compared with what was originally negotiated.
Quicker repayment terms – shortening the length of your loan by refinancing it with a new one allows you to repay all the money you owe over a shorter period of time.
Lower monthly repayments – by refinancing to a lower interest rate, borrowers can often reduce their monthly home loan repayment amount.
Pay off your debt sooner – if your current loan has a high-interest rate and the majority of your prepaid installment savings (or equity) is allocated to repaying the debt quickly, then refinancing could be used as an opportunity to switch to an investment property or line of credit where those funds can earn more through investments.
While it is true that most banks now offer very similar products for refinancing with no incentives such as cashback, waiving of fees, etc., there are still some banks that do provide these perks with the new product.
If you are considering refinancing your home loan, make sure you speak with a professional first. Institutions will offer different products for different situations; one product may suit your needs better than another, but it is imperative that this information has been communicated clearly to you in order for you to make an informed decision.
