During challenging times, making financial decisions can feel overwhelming. And if you’re like most people, you don’t really know what to do or when to do it. So here’s a little guidance:
Step 1: Assess your personal financial situation – it is unique and it needs to be treated as such.
Step 2: Don’t panic, ever. Financial support and services are available to help you manage the effects of COVID-19.
Step 3: Consider your options carefully – read and read more and read some more.
Step 3: Make Informed Decisions.
Step 4: Act!
Let’s consider the ins and outs of refinancing your loan:
You could get a lower interest rate
Banks and other lenders are also struggling at the moment so many lenders are offering very low interest rates on home loan repayments.
Should I stay with my current lender or refinance with a different lender? Try to negotiate a more competitive rate with your current lender first. Everything these days is negotiable. If you’re considering a switch, remember that new customers generally get big discount rates with new lenders. That said, be sure to read all the fine print carefully as introductory offers are not always what they seem.
A different loan may have better features
If you are interested in refinancing, keep looking for a loan that offers you more flexibility and saves you money. Some of the better features may include an offset account, additional repayment and redraw facilities, an interest only option or a fixed/split interest option.
Now is a great time to fix your rate as interest rates are incredibly low. As always though – be mindful of the drawbacks of fixing.
A reduced loan term
If your income is secure (despite the COVID-19 crisis) this may be a good time to make additional repayments on your loan. This will save you money long term as you will pay less interest overall.
Does your current lender offer this feature? If not, perhaps you should consider a different lender who does!
Your loan could help with cash flow
If you are struggling financially at the moment, you may be able to defer payments on your mortgage, instead of refinancing your loan. Some lenders are offering the opportunity to access your redraw facility, reducing repayments to the minimum monthly repayment amount, or applying to change your repayments to interest only payments. These options could all mean more cash flow.
Is your lender suggesting alternate options in a bid to help you? Speak to your lender about your options – everything is negotiable.
Consider the costs of refinancing
There are often costs involved when refinancing a loan. Examples of these costs include exit fees, government charges, stamp duty, Lenders Mortgage Insurance, higher interest repayments etc. These depend on how you refinance your loan. Speak to your lender to establish what these costs may be. Always read the fine print.
Banks, Mortgage brokers and other lenders are open for business
Meeting with them via phone or video conference can be arranged with most lenders. Though a caution: wait times are longer these days.
- Everything is negotiable – especially with lenders, especially now
- Assess your personal financial situation first
- Get expert advice from a mortgage broker or financial adviser
- Make an informed decision
- Call us for help. Any time.
Consider these steps to look after yourself and your money provided by https://moneysmart.gov.au/covid-19 – a lot of information in one place.
And refer to www.cmblawyers.com.au to chat to more experts