If you’re considering refinancing your home loan, it will pay off in potentially thousands of dollars of saved interest if you compare all home loan refinance offers available to you. And with interest rates fluctuating and new loan products entering the market regularly, it’s a smart move to compare offers before signing on the dotted line.
Why Compare Home Loan Refinance Offers
Comparing refinance offers from all the lenders on the market might seem like too much work, but with the right approach and some help, it can be easily accomplished and the savings can be significant! Imagine reducing your monthly payments, paying less interest over the life of your loan or accessing helpful features that align with your financial goals.
Checking if your current mortgage is still the right fit is something you should consider doing periodically since refinancing may help you save significantly. Finding the right loan, however, requires a clear, strategic approach. To give you a hand, here’s a step-by-step guide to comparing home loan refinance deals effectively and maximising your savings.
Step 1: Understand Your Current Home Loan Terms
Before comparing all the options, it’s essential to know where you currently stand with your mortgage. Start by checking your current interest rate, remaining balance and loan term. This information helps set a baseline for evaluating new home loan refinancing offers.
Step 2: Look at Interest Rates and Calculate Savings
Interest rate is often the main reason borrowers refinance. Even a slight reduction in your rate can lead to big savings. For example, switching from a 6.8% to a 5.8% rate on a $500,000 loan could save over $300 monthly, or more than $100,000 for a 30-year loan term. But the real key is ensuring that any upfront costs don’t outweigh the savings. Use online calculators or consult with our mortgage brokers to see your net benefit.
Step 3: Consider Loan Features That Meet Your Needs
When you compare home loan refinance offers, you can check the helpful loan features available to you. Some of these can optimise savings and provide flexibility. Here are some key features to consider:
- Offset Accounts – This account offsets your mortgage balance, reducing the interest you pay.
- Redraw Facilities – If you make extra repayments, a redraw facility allows you to access those funds later.
- Split Loan Options – Fixed and variable rate split loans provide stability while potentially benefiting from lower variable rates.
Choosing the right features is essential to aligning your loan with your financial goals.
Step 4: Account for Fees and Total Costs
Refinancing isn’t free. Common fees include exit fees, application fees and settlement charges. When weighing refinance offers, calculate how long it will take to recoup these costs with your monthly savings.
Cashback refinance offers, often ranging from $2,000 to $5,000, can sweeten a refinance deal when lenders are offering them, but be careful! A loan with a slightly higher interest rate might cancel out the benefit of any cashback, so always calculate the long-term costs.
Step 5: Check Your Loan-to-Value Ratio (LVR)
Your LVR can significantly impact the interest rates available to you. A lower LVR typically results in better rates because it represents a lower risk to lenders. Generally, having an LVR below 80% can help you avoid LMI costs and make you eligible for the most competitive rates.
If your LVR is above 80%, you may want to focus on building more equity before refinancing to access better loan options.
Step 6: Timing Your Refinance for Maximum Savings
Refinancing is worth exploring periodically, as even small market changes can impact your loan’s competitiveness. Experts recommend reviewing your loan every two years, especially if your interest rate has increased or if your property value has grown.
Major life changes, such as a job shift or increased income, can also be a good time to evaluate your loan options. Waiting until a fixed-rate period ends can also help you avoid hefty break fees if you’re on a fixed-rate loan
ZEP Finance Can Help Make Your Refinancing Work for You
Refinancing is a powerful tool to optimise your finances, but to compare home refinance offers effectively, you need to look at more than just the interest rate. Carefully weighing fees, features and how long it will take to recoup your refinancing costs is necessary. These can help you make a well-informed decision that aligns with your financial goals.
With a bit of research and regular home loan health checks, along with the help of ZEP finance, you can make sure your mortgage keeps up with your life and your finances. Contact us today to learn more about refinancing, what offers you can choose from and to get the help of our experienced mortgage brokers.
After studying business and finance at university, Zain initially expected to pursue a career in finance. However, his passion for property and the experience of buying his own home led him to mortgage broking. He began his mortgage brokering career in 2009 and founded ZEP Finance in 2010.
