Is now the time to refinance?

Having seen two increases to official interest rates by the Reserve Bank so far this year, anyone with a mortgage, (or planning on getting one soon), should be keeping a sharp eye out for the best deals from lenders.

What is surprising, though, is that many people with a home loan are NOT looking around to see what options are available if they refinance. Perhaps they just assume that their current rate is competitive, or they simply can’t be bothered finding out? Either way, there are two key reasons that I would urge you to reconsider.

Firstly, if you speak to anyone involved in mortgage lending they will tell you that the vast majority of lenders have a “loyalty tax”. It’s the extra interest they add to your loan on the assumption that you haven’t thought about or couldn’t be bothered shopping for a better deal. So the chances are there’s a better deal out there, and all you have to do is ask.

Secondly, depending on how long ago you took out your current loan, you are probably a more attractive loan prospect than you were back then. Here’s an example…if you bought a house in Thomastown in February 2021, the median price back then was around $625,000. Five years later, that figure was above $780,000. So, on top of the amount you’ve reduced your loan by, you have an extra $160,000-plus of equity in your home. So you’ve probably gone from an LVR (Loan-to-Value Ration) of say 80 percent or more, to an LVR under 70%...and that warrants a cheaper interest rate from a lot of lenders all by itself.

So, as I said earlier, even if you have no property plans for the coming year, it’s still a great time to find out if there’s a better deal out there. You could be saving hundreds of dollars every month, and it won’t cost you anything to find out. All you need to do is have a chat with an experienced independent mortgage broker and let them do what they’re good at.

Of course, if you want a referral to a trusted broker in our area, feel free to give me or one of our team at Barry Plant Thomastown a call on 9466 3233.

We are always happy to help out.

Best wishes,

Con Constantinou

Barry Plant Thomastown