There are many reasons why you may wish to refinance. Your loan may have too many fees, the the interest rate may be too high or you think you can find a better deal.
No matter the reason, if you decide to refinance, you need to have a clear idea on what you want from your new loan. Each loan comes with a different set of features that may or may not be useful to you. Before searching for a new loan, it is a good idea to write down what features interest you and which would help you save the most money.
Consider each of the features below:
Free Redraw: Being able to pay more into your loan than required is a great advantage as you are reducing the amount owing as well as the amount of interest. However, with some loans you are unable to withdraw that money or have to pay a fee. Free Redraw allows you to keep savings in your home loan, but you can still access it if necessary. It is also a good idea to have a Fee Free Redraw so that you are not being charged every time you take out money.
Offset Account: This acts as a separate bank account or a credit portion that is linked to the loan. You are able to use it for everyday transactions. Your pay can be directed deposited and bills can be paid from this account. An offset account is not part of the home loan; its purpose is to reduce the interest that you pay on your loan.
Bpay: This is a great feature that allows you to create a personalised list of companies you pay bills to, so that when a bill arrives, you can easily enter the payment. You can even set up payments so just before the bill is due, it will automatically withdraw from the loan.
Direct Salary Crediting: If you are planning to use your loan for everyday purchases and transactions, why not have your employer put your wages into your loan? This way it will also reduce the amount of interest that you have to pay every day.
Internet Access: In this day and age, it seems nearly everything is accessible online. It’s a great time saver and you are able to access your loan whenever you need to.
Bonus Rate Drop: This is a benefit for long term customers and is a good way to see if the lender provides rewards for those who stay with them. A bonus rate drop is simply a discount on your interest rate after a certain amount of years.
Unlimited Extra Repayments: Being able to pay off your loan as quickly as possible is usually a main goal for everyone. This feature allows borrowers to make payments as often as they like into their loan.
If you decide to refinance and know which extras you will benefit from the most, you will be able to find a loan not only with a low cost, but with features that could save you money in the long run.