For decades the Australian housing market has been steadily climbing, fuelled by a combination of an increasing number of available properties, customisable repayment terms and interest rates at historic lows. These factors play an important role in the affordability and accessibility of home ownership, and people have taken advantage at astonishing rates. Even more impressive, home owners and buyers alike were surprised by the recent 0.25% interest rate reduction, providing an even greater incentive to buy property, either as a primary residence or as an investment property. For those who are already home owners, however, the interest rate reduction provides another opportunity that may be overlooked.

Home Loan Refinance

A home loan refinance allows home owners the ability to pay down their current home mortgage balance with new financing that has the potential to provide a great number of benefits. First, refinancing your home in the current low interest rate environment provides for savings each month if a home owner is able to reduce his interest rate. For example, a home owner that has a $400,000 mortgage balance with a 5.4 per cent interest rate is paying, on average, $230 more each month than a home owner with a mortgage loan that carries a 4.4 per cent interest rate. Refinancing allows home owners the ability to take advantage of the lower interest rates offered to borrowers and ultimately reduce their monthly repayment obligation.

In addition to lowering the interest rate, a refinance may also provide an affordable way to consolidate and pay down higher interest rate debt, such as credit cards or personal loans. For a home owner who has been in his or her home for an extended period of time, it is highly likely that equity has been built up within the property. Most mortgage lenders are able to provide a home loan refinance that not only pays off the old mortgage balance but also provides access to the equity that has accrued within the home. For instance, a home that is worth $500,000 and has a current mortgage balance of $250,000 may be refinanced with a home loan for $350,000, paying off the current balance and giving the home owner access to $100,000. Those excess funds can be used to pay down high interest rate debt, to obtain an investment property or to complete necessary renovations on the home.

Home owners have an opportunity to use the recent interest rate reductions to their advantage a variety of ways through home loan refinance. Speak to your trusted mortgage lender to find out how you can save money from the rate cuts with a home loan refinance today.