Best Time To Refinance Home And The Best Time To Refinance A Home Loan
Is it good to refinance your home loan? Absolutely it is. Is it good to refinance your home loan every six months? Probably not. We have to do the mathematical formula on it, right. Because obviously there is that cost to moving your home loan. So if you move too frequently, the interest rate benefit and saving that you may be receiving through lower interest rates may be offset by the cost of the fees that you’re being charged each time you need to refinance. Plus the time cost of yourself going through that whole process as well.
I know certain people that may be looking every six months to refinance. Again, I think that’s probably too quick. I’ve definitely recommend an annual review of your loan just to see where you’re at and what the situation is. Doesn’t mean that you have to move every year.
What are we looking at? We’re definitely looking at the interest rates. What’s available to you? If you’re fixed, when’s it coming out? If you’re variable, what’s your variable rate? The other thing we need to think about is some banks charge a fee, an annual package fee or a wealth fee to get discounted interest rates. So we need to factor that in as well.
And those fees can vary bank to bank from $250 to $495. So we need to think about that when we’re talking about refinancing because $495 offsets some of the interest rate saving that you will receive through refinancing with the bank. So it’s not a clear black and white answer. But what I would always recommend is, if you’re loyal to the bank, it doesn’t hurt you to ask a broker the question of, “Am I going to benefit from refinancing from this bank?”
And in the past, I’ve recommended clients to stay where they are because their deal that they’ve got is pretty much unbeatable. So not worth moving. And then there’s others where there’s definitely a strong benefit to moving.
And the one little bit of information that I’d like to remind everybody is a lot of Australians what I’ve seen, were a bit relaxed or too relaxed when it comes to our home loans. And we don’t probably assess them enough. And we get too loyal to a bank to the point where we don’t want to move, and it’s costing us financially.
And banks won’t give you the best offer sometimes until you say you’re going to move. And then their best offer isn’t still the best offer that’s in the market.