Top 5 Reasons to Refinance your Home Loan

1. To shorten the term of your loan

With interest rates at a record low, you may find that repayments on a 20 year mortgage are not much more expensive than a 30 year mortgage. If you’re able to meet the higher repayments, refinancing to a shorter loan term will make you pay your loan off quicker and save you money over the life of the loan.

2. To lower your interest rate

Refinancing your mortgage to a lower interest rate could mean drastically reducing your payment and saving thousands of dollars in interest. Lowering your mortgage payment can also save you hundreds of dollars per month that could be saved or invested.

3. To change from a variable rate to a fixed rate loan

If you currently have a variable rate mortgage, now may be the perfect time to refinance to a fixed rate loan. If interest rates rise again during the fixed period of the loan, you can save on interest repayments and a having a fixed payment is easier to plan and budget for.

4. To cash out home equity

Refinancing your home loan can be a great way to access home equity so that you can invest in a rental property or shares. This is called ‘gearing’. Alternatively, you can use your equity to renovate, for home improvements or any other worthwhile purpose.

5. To consolidate debt

Rather than paying off personal or car loans at a high rate, it might be worth consolidating your personal loans into your home loan so you can pay off your debt at the lower rate. This enables you to pay the debt off faster and potentially save thousands of dollars in interest payments providing you maintain you repayments at current levels.

[Source: http://www.beyondbank.com.au/blog/2013/12/top-5-reasons-to-refinance-your-home-loan/]