Many Blakehurst homeowners focus solely on securing an initial home loan, but overlook the potential benefits of refinancing to access additional features. If your current loan lacks features like offset accounts, redraw facilities, or flexible repayment options, refinancing could unlock significant financial advantages.
Understanding Refinancing for Additional Features
Refinancing involves replacing your existing home loan with a new one, potentially from a different lender. While many people refinance to access a lower interest rate, you can also refinance specifically to add valuable loan features that weren't available with your original loan.
An offset account is one of the most sought-after features. This transaction account links to your home loan, and the balance reduces the loan amount on which you pay interest. For example, if you have a $500,000 loan and $50,000 in your offset account, you only pay interest on $450,000.
Key Benefits of Refinancing for Features
Refinancing to add features can provide several financial advantages:
• Interest savings: Offset accounts can reduce your interest payments substantially over the loan term
• Flexibility: Redraw facilities allow you to access extra repayments when needed
• Tax efficiency: Offset accounts may provide tax advantages compared to traditional savings accounts
• Debt management: Some loans offer features to help consolidate debts into your mortgage
When to Consider Feature-Based Refinancing
Several scenarios make refinancing for additional features particularly worthwhile:
- Fixed rate period ending: If your fixed rate is expiring, this presents an ideal opportunity to review your loan structure
- Changed financial situation: Improved income or accumulated savings may qualify you for loan products with more features
- Releasing equity in your property: If your property has increased in value, you might access loan options with enhanced features
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Book a chat with a Finance & Mortgage Broker at Solara Financial today.
Types of Features to Consider
When exploring refinance options, consider these valuable loan features:
Offset Accounts: These can be partial or full offset accounts, with full offset providing dollar-for-dollar interest savings.
Redraw Facilities: Allow you to withdraw additional repayments you've made, providing financial flexibility.
Split Loans: Combine fixed interest rate and variable interest rate portions to balance security and flexibility.
Extra Repayment Options: Make additional payments without penalties to reduce your loan term and interest costs.
The Refinancing Process
The application process for feature-based refinancing follows these general steps:
- Assessment: Review your current loan and identify desired features
- Research: Explore loan options from banks and lenders across Australia
- Documentation: Gather required documents including bank statements and income verification
- Application: Submit your refinance application
- Approval: Complete the lender's assessment process
- Settlement: Finalise the new loan and access your chosen features
Financial Considerations
Before refinancing for features, evaluate your overall financial position:
• Loan amount: Ensure the new loan amount suits your needs and capacity
• Interest rates: Compare both variable and fixed refinance interest rates
• Fees: Factor in application fees, valuation costs, and discharge fees
• Break costs: If leaving a fixed rate early, calculate any break costs
Maximising Your Refinance Benefits
To optimise your refinancing outcome:
Conduct a home loan health check: Regular reviews help identify opportunities for improvement
Compare comprehensively: Don't focus solely on interest rates; consider the total package including features and fees
Check eligibility requirements: Ensure you meet the criteria for special lender policies or featured products
Consider future needs: Choose features that align with your medium to long-term financial goals
Making the Right Choice
Refinancing for additional features requires careful consideration of your specific circumstances. The right loan structure depends on factors including your savings patterns, income stability, and financial goals. While an offset account might benefit someone with substantial savings, others might prioritise flexible repayment options or the ability to fix portions of their loan.
Working with experienced mortgage professionals can help you understand which features provide the most value for your situation. They can access loan options from multiple lenders and guide you through the application process efficiently.
Refinancing to add valuable loan features can significantly enhance your financial position and provide greater flexibility in managing your mortgage. With proper planning and professional guidance, you can unlock features that save money and provide long-term financial benefits.
Call one of our team or book an appointment at a time that works for you to explore how refinancing could add valuable features to your home loan.
