Whilst refinancing during the COVID-19 outbreak may not be possible for all homeowners and borrowers due their current circumstances, replacing your existing home loan with a new loan is usually a viable option to consider.
Refinancing your loan allows you to reduce your monthly payments, lower the interest rate, consolidate debt, and alter the loan term and agreement. Here are five good reasons to refinance your home loan in North Sydney while in the face of a global pandemic.
1. Lower interest rate
The official cash rate is now at 0.25 per cent, the lowest in the last 60 years. Lenders are now offering incredibly low-interest rates as they are struggling to find new customers while competing hard with the rest of the financial institutions. For this reason, now is the right time to refinance and take advantage of a lower interest rate from a prospective lender.
2. Access to more flexible loan features
Another good reason to refinance is that many lenders are now offering flexible and attractive features on various loans. A few examples of these features include an offset account, additional repayment, an interest-only option, or a split-interest option. If your current loan doesn’t have certain features that you have long wanted to benefit from, then you might as well consider the refinancing option now.
3. Significant reduction in your loan term
Borrowers can have extra savings with steadily decreasing interest rates. If this is the case for you, then it can be a good idea to make additional payments on your loan. That way, you can pay off your loan more quickly amid the current COVID-19 crisis. However, if your current lender doesn’t allow you to make additional repayments, then consider refinancing.
4. Borrowing against your equity to renovate
Refinancing allows you to release some equity. For the uninitiated, equity is the difference between the value of your property and the balance of your mortgage. You can have access to this by up to 80 per cent, where you can use the money to renovate your house. In fact, now is the best time to have a home renovation, whether it’s a kitchen or bathroom remodeling.
5. Help with your cash flow
A lot of people have lost their jobs or businesses were shut down due to the global pandemic. If that’s the case, you may be in a difficult financial situation right now. You may want to seek financial assistance from your lender. Apart from having a payment deferment or repayment, you may consider refinancing as well.
If you’re completely decided, you might as well take the plunge into refinancing your loan now. As outlined above, you can take advantage of securing a lower interest rate, having more flexible loan features, reducing your loan term, borrowing against your equity to renovate, and getting help with your cash flow through refinancing. With these benefits, now is a great time to consider refinancing.
If you are looking to refinance your home loans in North Sydney amid the COVID-19 outbreak, get in touch with our mortgage brokers at BrickHill today to see how we can help!