Apr 15, 2020  | Tags: banking, debt, lender, refinance

Our Insights

What are the benefits of refinancing during the COVID-19 crisis?

As most of you are probably aware the lenders are offering you an option of deferring your home loan repayments for up to 6 months if you have lost your job and struggling financially during the COVID-19 crises. It's definitely a good idea to look at this option if you are unable to make those repayments however it's important to look at your current interest rates and repayments before you go down the path of deferring your loan. Refinancing your home loan could help you to save money by reducing your interest rate therefore reducing your repayments.

How do I reduce my interest rate?

The official cash rate is now at 0.25% which is the lowest it has been for over 60 years. This means that many lenders are offering some incredibly low interest rates. 'New to bank' business are a lot more attractive to lenders and they tend to offer a lower interest rate than what is on offer to existing clients. It's definitely worth shopping around. There are also some very attractive refinance cashbacks on offer which can help cover any costs incurred.

Is your loan structured to suit your individual needs?

It's important to find the loan that has the features suited to your needs and requirements. Should you fix, should you stay on variable or even a combination of both, should you have an offset account, does your loan have redraw... Finding the answers to all of these questions can feel is a little overwhelming. There are many ways to structure your loans. Everyone has a different need when it comes to a home loan or Investment loan we are all unique so it's important to talk to someone who can understand those individual needs and steer you in the right direction. Fixed rates are at record lows right now however you must be fully aware of the potential costs that can come with fixing your loan.

How do I reduce my loan term?

With steadily decreasing interest rates seen over the past few years and your income is secure despite the COVID-19 crisis, this could be a good opportunity to pay down your loan more quickly by making additional repayments. Making those extra repayments will reduce your loan term allowing you to pay the loan off much quicker. Your current lender may penalise you for making extra repayments so you should check on your options including looking at other lenders which may allow this at no added cost.

What can I do to add value to my home?

If you have some extra time on your hands, now might be a great time to tackle some of those renovations which in turn may add value to your home. If this is something you've been thinking about but you don't have any savings, you may be able to refinance your home loan to release some equity to complete those jobs around the house that you never had time to do before. COVID-19 is changing our lives dramatically, keeping isolated can make us all a little stir crazy so finding things to keep us busy whilst at home will keep us all in a positive mindset. Let's use the extra time at home to finish those projects around the house that we've been putting on hold. Renovating can add substantial value to your property.

How can we refinance with the Social distancing rules in place?

Mortgage brokers, banks and other lenders are all considered essential services and are remaining open for now. Due to the impact of COVID-19 and the need to keep the social distancing rules in place we can arrange other methods rather than having to do face to face meetings. This could be in the way of online meeting or over the phone. We are still available and happy to discuss what options we have available to make the process as streamline as possible.

Do you require Financial assistance?

If you have lost your job or your business has closed down and your suffering significant Financial difficulties, you won't be in a position to refinance your loan right now. However, you may qualify for financial assistance from your lender, such as deferring your mortgage repayments for up to six months or you could simply switch your repayments to Interest only to help ease the burden. If this is the case, contact your current lender to discuss your options, don't just stop making the repayments as this could affect your credit score in the long term. It's important to put the correct procedures in place to ensure your credit score isn't impacted.

Talk to an expert

An experienced mortgage broker can draw on their market experience to give you crucial advice as well as helping you find the best possible loan deal.

Calder Financing Broking can find you the best deal for your needs, and guide you through the process.

Contact the team or call directly on 08 8373 3333 to meet an experienced broker today for a free, no obligations discussion about your needs.

Written and Supplied by Hayley Walsh of Calder Finance Broking, for more information please visit the Calder Finance website. Please note that Calder Finance Broking Pty Ltd is a Corporate Credit Representative of BLSSA Pty Ltd ABN 69 117 651 760 ACL 391237.