Today’s competitive home lending market makes refinancing much easier than in the past. There are many good reasons to consider refinancing. Perhaps your financial circumstances have changed, you’ve started a new job or are dissatisfied with your existing lender. Maybe your current mortgage no longer suits your needs.

When to switch

Switching loans or lenders (or both) could be the answer. But it can also be risky. To assess if you’re likely to benefit from refinancing, ask yourself:

• am I happy with my lender?
• do I need reduced or added features with my loan?
• am I paying too many bank fees?
• is the interest rate too high?
• have my financial circumstances changed?

Refinancing takes time and costs money. Be clear about why you want to refinance. Decide the type of loan you want, list the required features and do your sums to make sure you won’t be worse off in the long-term.

Options

Fixed or variable rate loan

With a variable rate loan, payments increase when interest rates rise. This can affect family budgets and lead to changes in your overall financial circumstances.

Refinancing to a fixed loan can offer protection against rising rates. This can help borrowers who don’t have the cash flow to cover higher loan repayments. Fixing also gives you the ability to budget over the long-term.

Split loans

An alternative to fixing your entire home loan is to refinance to a split loan. Split loans let you fix part of your loan and leave the rest on a variable rate. Generally, split loans offer the flexibility and features of variable rate loans whilst offering the certainty of a fixed loan.