If you are considering refinancing, we've compiled a few suggestions for you. 

Even with interest rates on hold this month, it is always important to make sure you have a competitive interest rate on your home loan. In February, the value of external refinancing rose 2.7 per cent to $19.9 billion. If you’re considering refinancing, we've compiled a few suggestions you might want to consider.

#1: Consider multiple factors when comparing home loans  

Sure, getting a more competitive interest rate is appealing, but there are other factors to consider when comparing loans. For example, you may benefit from features such as an offset account or redraw facility, even if the interest rate is not necessarily the lowest one available. 

An offset account is a bank account that’s linked to your home loan. Any money in this account is offset against the money owing on your home loan. This reduces the amount of interest you pay – which can add up to a lot of savings over time. 

With a redraw facility, you can make extra repayments on your home loan, but still access the funds later if needed. This allows you to reduce your interest – so it’s another great option to consider. 

Aside from these kinds of features, you may want to think about what else is important to you in a lender. Maybe it’s customer service. Bottom line is the interest rate is not the be all and end all. 

#2: Consider the comparison rate 

You may have noticed lenders often list an interest rate, as well as a comparison rate. 

The comparison rate factors in the interest rate, as well as any fees and charges relating to a home loan. This is the one you want to be looking at when shopping around for a mortgage. 

The comparison rate gives you a clearer idea of the true cost of a loan and enables you to compare different options. 

#3: Don’t forget about the fees 

Don’t forget to budget for any costs involved in switching lenders. There may be mortgage discharge fees, mortgage registration fees, new application fees and Lenders’ Mortgage Insurance (if you owe more than 80% of the property’s value). 

If you are currently on a fixed home loan, there may also be break fees. Ask your lender for clarification. 

#4: Cashback offer is not everything 

With so much competition for business, many lenders are offering refinance cashback offers to lure you in. “Come hang with us and we’ll give you $4000.” Sounds awesome, right? 

While we all love a cash injection, it’s important to look at the big picture and whether a home loan is appropriate for you now and in the future. Does the home loan have the features you need? And is it suitable for your financial situation and goals? 

#5: Investigate your debts and consolidate 

If you have multiple debts on the go, it’s a good idea to speak to us about whether debt consolidation may be appropriate for you. This is where you essentially roll all your debts into your home loan. 

Debt consolidation can be beneficial in that you have one repayment to make, instead of multiple debts to repay. The interest rate on your home loan may also be lower than on say personal loans or credit cards, so it’s worthwhile exploring this option.  

#6: Professional mortgage advice

Changing home loans is an important financial decision, which is why you need professional mortgage advice. We are across all the latest borrowing requirements and changes in the market and can guide you about which home loan is appropriate for your specific needs. 

Addisons have access to some great deals at the moment. Let's talk about how much you can save by working with Addisons. 

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