Refix or Refinance your Mortgage – What should I do?

Your fixed term loan is coming to an end and you are thinking should I refix for similar term or look for a refinance option to get a better deal. 

Guess what, you are not alone. 

Most home owners are faced with this question at the end of their fixed term. You have the option of refixing with your existing lender or refinancing.

Refixing is continuation of your existing loan by negotiating a new fixed rate term with your existing Bank. By default, loan moves to variable rate on expiry of your current fixed term. This is the time you could negotiate for better rates with your existing lender and possibly seek incentives for continued loyalty to the bank.

Refinance or refinancing your home loan means pay off your existing loan and start fresh again with another bank which offer better terms. You would consider refinance if the current bank does not offer favourable rates and cash incentives available in the market.

Once you have taken a home loan, it is important to keep yourself attuned with any changes in the interest rates and availability of options which give new and better terms than your current loan.

At Accord Home Loans, we will provide you with the opportunities that meet your needs, give you the options to choose between various banks and lenders and also negotiate the best offer for you.

Let us look at some reasons to revise your current home loan and move on to refix/refinance.

Change in your income

There can be times when your financial situation changes like getting a promotion at a job, getting a surprise bonus, or getting an inheritance which generates more income opportunities for you. Restructuring which may involve breaking your current fixed term on your mortgage at this time turns beneficial as with the new home loan plan, you can increase your monthly payments, hence reducing the loan term and also saving a notable amount on the interest charges. 

Change in your lifestyle or circumstances

When an unexpected expense occurs, it creates an impact on your finances. Getting a pay cut, wedding, planning to start a family, etc. may create a strain on your income.  This could create cash flow shortfalls leading to loan payment defaults. Reviewing the expenses and restructuring the mortgage at this point can be helpful. You could opt for a longer loan term which will reduce repayments and possibly a better interest rate. 

Thinking of consolidating personal loans on home loan

Managing multiple loans and debts and making all the different payments on time can be a daunting task. Each of these different loans (like personal loans,  credit card, car loans, etc) will have a possibly higher interest rates. You can opt to consolidate all these loans and select a loan structure that can pay off these debts. 

Thinking of redevelopment and / or home makeover

A home makeover calls for additional finances. Whether it is an extension of your house or a makeover, you may want to borrow additional funds for the development.

Savings could be achieved with aligning repayments with cash flows

Did you know that aligning the payments with your salary can help in paying the loan faster. Some people get paid weekly but they prefer to pay their loan payments monthly.  Banks calculate interest on the balance on daily basis so if you are able to make the repayments aligned to your salary, you will be able to see the savings instantly.

At Accord home loans, we will evaluate your current scenario and find the best possible option to ensure you repay your loan faster without compromising your life style.

We will crunch your numbers and work out all scenarios to see if refix or refinance may work in your favour. Give us a call today or book an appointment.

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