3 Questions to Ask Yourself before Refinancing Your Home Loan

Hello, Brendan from Buyers Choice, your home financing specialist This week, I want to have a chat about refinancing

Given the current climate we're in, the number of offers out there from various lenders, a common discussion I have with various people is, is now a good time to refinance? If you're thinking about refinancing, I think there's three questions that you should ask yourself before committing to refinancing your home loan The first one is, has your finances changed? Have you received a pay increase? Is your expenses gone up? Your child's moved from primary school to high school, or they've decided to start eating twice as much food Have you had a new baby come into your life? There's various things which could have happened which changes your financial situation As a result, it may mean it is a good time, or it could mean that it's a poor time to refinance your home The second question you should be asking yourself, will refinancing save you money? Now, I have previously done a video on the costs which you incur when you refinance your home

It isn't a zero-sum gain There's also, and I've mentioned this previously, the fact that if you're over an 80% loan-to-value ratio, LMI will be involved, so Lenders Mortgage Insurance So between that and the cost of refinancing, it could cost you from $1000 to a couple of thousand dollars to $10,000, depending on the size of your loan and your circumstances, to refinance Now, if you're, found a great new rate, and you're saving $50 a month by refinancing your home loan, but it's gonna cost you $1000 to refinance, is it worth it? Is it worth your time and effort, getting all the information together, putting it all together, submitting the application, going through all that, for something which is gonna take you 20 months to pay off? No, you're better off staying where you are So it's a consideration that you gotta put into mind

The third question you should ask yourself is, are you planning on selling your home in the near future? And again, it's around, if your plan is to sell, move on, upgrade, do whatever, now may not be the best time to refinance There's a lot of effort, you've gotta get all the paperwork together, you've gotta put the application in, you've gotta go through the process If you're going to a new lender, you've gotta set up all your accounts and everything else So as a result, if you're considering selling your home in the near future, or your loan's starting to get small, there's only a small amount still to be repaid, it may not be worthwhile refinancing We look around and we see these great rates

Save an extra 025% here, fix it for three years at this new, never-before-seen and never-be-seen-again interest rate But unless there is a benefit to us, it's not worth doing So next time when you're thinking about refinancing, think about these three questions again Has your financial situation changed? Are you going to save money by refinancing? And are you looking at selling your place in the near future? And if those answers don't add up to you, just put it on hold until the next time you review your home loan

Anyway, Brendan from Buyers Choice, great talking to you again today Please hit like to this video, and if you've got any questions, feedback, please leave a comment below Look forward to talking to you next time Have a wonderful day