As interest rates have remained steady in Australia for quite some time now, you may be wondering if it’s time to re-evaluate your home loan and consider home loan refinancing to a new kind of mortgage. Before you take the plunge, there are some questions you should definitely look into:
What’s your financial situation?
The type of interest rate that works best for you depends entirely on where you’re at in your life. Are you a first home buyer, with limited funds and a desire for some concrete certainty about how much you will be paying? In that case, a fixed rate loan may work best, keeping you anchored for a long period.
However if you’ve got a bit more cash up your sleeve, and want to be able to play around with taking out more capital from your loan, a variable mortgage may suit you better – while there is the risk of rates going up, you will find the lowest points are below fixed interest rates.
Do you have kids? Will you?
If you have kids leaving home permanently soon, you may be interested in going for a variable rate mortgage, as your financial dependents will have gone. Alternatively, introducing a new child to your family may require setting out a long-term financial plan, something that could involve switching to a fixed interest rate.
How much do you want to repay?
Generally speaking, the amount you can repay on a fixed rate home loan annually is capped. This keeps the loan at a set length, whereas fixed rate lending has more flexibility with how much extra you can repay. This means that work bonus can go into the loan, to either pay it off more quickly or to be redrawn in times of emergency – it’s up to you.
Ultimately, it is your financial and family situation that dictates what kind of loan works best for you – but you don’t have to make the decision yourself.
You can contact a Smartline Mortgage Adviser on 13 14 97 for home loan advice. Or complete our call request form and we’ll call you!
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.