Why should you refinance your property?

In today’s economic climate, we are seeing many people struggle with the rising cost of living. A big chunk of the rising costs can be attributed to mortgage repayments, as well as skyrocketing food prices, petrol, and utility bills. People that purchased properties several years ago when mortgage interest rates were relatively low, sitting around the 2.50-3% mark, are finding their mortgage coming off those low fixed rates and increasing to upwards of 6.50-7.50%, increasing their fortnightly or monthly mortgage repayments by hundreds of dollars. Shopping around for better rates has led to an increase in refinances over the last year. Refinancing is commonly known as replacing your current mortgage with a new one, either with your current lender or a new one, to receive better terms or to borrow more money.

Refinancing comes with many pros and cons. The biggest pro of refinancing is that it can help people who are cash-strapped to free up some money in their fortnightly or monthly budget as refinancing often gives people a lower or better suited interest rate. Refinancing to a better rate can help alleviate the financial pressures many people face today. The biggest con of refinancing is the cost involved in a refinancing transaction. Many people do not realise that they will need to instruct their lawyer to act on this transaction on their behalf, which attracts legal fees of upwards of $1,500 or more. For people who are already struggling financially, this cost can cause added stress. However, some banks offer cash contributions in refinancing matters and these funds can be used to pay the legal costs incurred.

If refinancing is looking like a good option for you, please consult with your mortgage broker or bank manager to explore your refinancing options and instruct your lawyer once you have decided to refinance your property.

Georgia Ellen, Senior Solicitor

“Blue toy car with Refinance text on wooden blocks” by wuestenigel is licensed under CC BY 2.0.