why should I refinance?

"Should I refinance?" is a complex question, since every situation is different and no two homeowners are in the exact same situation.

There are 3 primary reasons to refinance your home:

  1. According to MFAA/BankWest Home Finance Survey (Dec 2006) the main reason for refinancing was to achieve lower interest rate (64%)
  2. You may want to reduce the term of your loan
  3. Or you may want to consolidate your debt

All of these are excellent reasons to pursue refinancing and asking yourself a few questions may help you determine if you can save money:

  • How much can I lower my current monthly payment?
  • How long do I plan to stay in the house after I refinance?
  • How much will I pay in refinancing costs?

 If you are refinancing to save money on your monthly payments, the following calculation may assist:

  1. Calculate the total cost of the refinance - example: $2,000
  2. Calculate the monthly savings - example: $100/month
  3. Divide the result in 1 by the result in 2 - in this case 2000/100 = 20 months. This shows the break-even time. If you plan to live in the house for longer than this period of time, it makes sense to refinance.

Whatever you choose to do, consulting a mortgage broker can often save you time and money. 

Check out our mortgage broker search, select a broker and make your enquiries.

How to Refinance?


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