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Fallen Asleep on Your Mortgage

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Have You Fallen Asleep on Your Mortgage?

So far this year, Aussie homeowners have experienced two cash rate spikes. The first in May and the second in June increased by a whopping 50 basis points.

Hence, home mortgage payments are on the rise. Though some buyers seek mortgage broker help, others are more reluctant to refinance.

The following information will discuss sleepy mortgage holders, why some homeowners are rushing to refinance, and how you can overcome the uncertainty of refinancing to score a better deal.

What is a 'Sleepy Mortgage Holder?'

You may be a sleepy mortgage holder if you are a self-proclaimed procrastinator or if you’ve ignored reviewing your home loan for over two years.

So, if you are tired of watching your interest rate rise or wonder why your rate seems so much higher than that of other people, it’s probably time to complete a Home Health Check.

Why are Some Homeowners Rushing to Refinance?

Rushing to Refinance

This is turning out to be quite a year for rate hikes. But following more than a decade of falling cash rates, the recent inflation increases caused the RBA to take action.

Consequently, we’ve already witnessed the cash rate increase several times this year. And plenty of experts expect the cash rate to reach more than 2.5% before the end of 2022.

After the first 25-point rate hike in May 2022, we saw many homeowners rise to the occasion and begin taking action by refinancing their home loans.

How Do Aussies Feel About These Rate Hikes?

We spoke to another home loan agency to better understand how Australia’s homeowners felt about the first rate hike in over ten years. And we discovered that:

  • Many felt ‘uncertain, worried, cautious, anxious, and frustrated.
  • 64% said that after the first hike, they thought it was urgent to take action.
  • 79% said they were only slightly worried about the May rate increase.
  • Yet, 80% said they were more open to discussing refinancing options with a broker.

Some Homeowners are Hesitant to Refinance

A recent survey looked at 1,000 borrowers and discovered that for 80% of people, their mortgage was their highest monthly cost.

Then, why would some homeowners be so hesitant to refinance?

60% of these people consider refinancing a “hassle” they want to avoid. And 61% said they were worried refinancing may make their situation worse.

Why You Should Check Home Loan Rates Regularly

Check Home Loan Rates Regularly

Just as you would review your budget when you get a raise or other changes occur to your financial situation, you must check your home loan regularly.

Consider how different your situation looks today than it did when you first bought your home – or even compared to the last time you refinanced.

Mortgage lenders take the hassle out of getting a home loan and will compare different rate offers you are eligible for from many lenders on your behalf.

You’ll never be pressured into making changes that you are not comfortable with. And in many cases, a home loan review is just that. Perhaps the best part is it doesn’t cost anything to conduct a review; if you find savings, great; if not – nothing lost.

And while you may save money on your interest rate and monthly payment, reviewing home loan options can also help in other ways. In fact, sometimes altering the structure of your home loan is enough to suit your needs better and save you money.

For example, if you are paying for specific features on your home loan and not using them, such as an offset account, it may be better to remove the options to avoid their associated fees.

But even if you’re not looking to refinance at the moment, it’s reassuring knowing that you have the best deal possible on your home loan.

Benefits of Refinancing Your Home Loan

Benefits of Refinancing

The right time to finance means you’ll be getting a better deal than what you already have, which could equal savings in the future.

Here’s how refinancing can help:

  • Obtain a better rate or lower monthly payments
  • Alter your loan structure – moving between the split, variable, or fixed
  • Change your home loan term
  • Add or remove features such as redraw facility or offset account
  • Access lines of home equity
  • Consolidate your debt
  • Change lenders

How Often Should Homeowners Refinance?

There are no set guidelines on how often someone should refinance their home loan. However, regardless if you’re in your 2nd or 20th year of your loan, refinancing may be the easiest way to ensure that the features and structure of your home loan are still the best for your needs.

How Long is the Refinancing Process?

Typically, refinancing your home loan takes between four and six weeks. If everything goes right, the process can be handled in as little as one week. Still, it also depends on how quickly you prepare and submit the documents and answer your lender’s questions.

Are there Fees Associated with Refinancing?

Yes. These rates will vary between borrowers, depending on your current lender and the new one, what territory or state you live in, and your overall financial situation.

Though the associated fees can seem overwhelming, you must weigh these costs with the savings to determine if you come out on top. But you don’t have to do this alone; your mortgage broker can help make the calculations for you.

Here is an overview of some fees you may encounter:

  • Application fees
  • Break costs
  • Discharge fees
  • Establishment fees
  • Lender’s Mortgage Insurance
  • Valuation fees

Is Refinancing a Good Option for You?

Whether refinancing is a good option for you or not heavily depends on your home loan needs and current circumstances.

If you are approaching the end of a fixed rate term, you feel worried about recent cash rate hikes, or your financial situation has changed, it would probably be beneficial to speak with a loan expert.

Chatting with our home loan experts is always free, so don’t struggle with these options on your own. Contact us today and let us find the right solution for you!

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