You might have bought your forever home, but that doesn’t mean you need to be wedded to a ‘forever loan’.
If you’re still paying off the same loan you took out to buy your house years ago, now might be the time to reassess.
According to a NAB Home Loan Specialist Leonardo Taboada, there are five major signals it’s time to reconsider your current home loan and refinance.
1. It’s been a while between check-ups
The first sign you may be stuck with a poor-fitting loan is you’ve been sitting on it for a while. It’s possible that even if you bought a home only a few years ago, your loan is now outdated.
“You should think of reviewing your loan just like a health checkup,” Taboada explains. “You can do it once a year, but it is great to do it regularly.”
“Very often, we see customers that have not reviewed their home loan in years and sometimes have outdated products or features that no longer suit them.”
2. Your life has changed
Have you changed jobs or received a promotion? Have you bought a new car and taken out another loan? Do you have children you didn’t have when you first bought your home?
Circumstances surrounding family, employment and other areas of life impact your financial needs.
If your incomings or outgoings have changed in any way, you could be in need of a new loan product or service that better meets your needs.
While individual circumstances differ, Taboada finds some customers are drawn to particular loan types at different stages of their life.
“First home buyers are generally looking for stability and reducing variability,” he says. “They often opt for a fixed product, which allows them to acclimatise to having to pay for a mortgage for the first time.”
“Compare this to young families who want the balance of flexibility by having a portion fixed and variable. Investors may want to maximise their tax benefits and many are guided by their accountants.”
3. You’re looking to renovate
If you want to renovate, refinancing can allow you to use the equity of your home to gain a better loan.
Refinancing using equity is also a better option if your existing loan doesn’t currently have a redraw option that allows you to take money back out of a loan you are paying off.
Given the present lending conditions, it may also work out cheaper to refinance completely, consolidate any debts and take advantage of the most up-to-date loan products. Chat to your lender to find out your best path.
4. You don’t have an offset account
If you have a regular transaction bank account but it isn’t being used to offset your loan, you could be missing out on some serious savings.
An offset account is when you have a bank account linked to your mortgage and the amount of money in that account is used to ‘offset’ the loan balance. The more money in that account, the less interest you will pay on the loan.
It still acts like a regular transaction account, while simultaneously helping you save on your loan repayments.
5. Your insurance/credit card isn’t linked
According to Taboada, there can be financial benefits to linking your insurance or credit card with your home loan.
“A customer may be on a simple package but have a credit card which they pay a fee for or have insurance that is not discounted,” he explains. “By identifying those needs, we can find a better product which creates a more holistic banking experience.”
The flip side, Taboada notes, some customers are paying for premium packages they don’t need.
Refinancing is all about finding the best solution to your needs at any moment in time, says Andy Kerr, NAB Executive Home Ownership.
“Every year our bankers help thousands of Australians get more from their banking by switching to NAB,” he says. “In the last 12 months, over 30,000 customers have refinanced to NAB to get a better deal or to gain access to the flexibility and support that a NAB home loan can offer.”
