Refinancing can be a fantastic way to help you pay off your loan faster and save money. BUT how do you truly know which deal is right for you?
June 2023 update: Many lenders have signalled that they will or have ceased offering cash-back deals. This makes finding the right lender to refinance with all the more important.
You shouldn’t jump at the first offer you see — the most attractive looking offer may not always be the one that puts more money back in your pocket long-term. Before you refinance or restructure a loan, get in touch with a local Nectar broker for a no-obligation chat first. They can compare rates and offers from multiple lenders and find you the right refinancing solution for your long-term financial goals.
1) Interest rates are climbing. By switching to a cheaper interest rate, you reduce your repayments and save more each month. Check out our repayment calculator to see what you could save.
2) Reducing your interest rate could allow you to pay off your loan faster. As your loan amount decreases, your equity increases.
3) With equity comes opportunity. If you already have equity from your property value appreciating, as well as refinancing, you could use the equity for other purposes – such as renovations, an investment, or just to create some breathing room. You can get an idea of how much equity you have in your property by using our equity calculator.
4) Better loan features. A refinance is a chance to get the features you want and get rid of unnecessary features that could be costing you hundreds in fees each year. This may help you pay off your loan even faster. Such features include offset accounts, repayment holidays and flexible repayment options.
5) If previous credit issues meant that you had to take a higher interest loan from a non-major lender, but you now have your finances back on track, you may now be eligible for a cheaper loan with a major lender. Once you have decreased the loan-to-value ratio on your property, refinancing can also help you to release a parental guarantor from your loan.
NOTE: lenders almost always charge penalty fees for breaking a fixed-rate loan and switching to another before the end of the agreed term. That’s why it’s important to have a Nectar broker do the maths and explain whether the long-term savings from reduced repayments will outweigh the break fee over the long term.