In this article:
There are a number of reasons you might consider refinancing your current home loan. Perhaps you want to secure a lower interest rate and cut the cost of your loan.
Or maybe you want to release funds to renovate your property or purchase another asset as part of an investment strategy.
Another key reason is to improve cashflow through consolidating debts. I recently completed a refinance for a couple who were under severe cashflow pressure from a combination of their home loan, large credit card debt and personal loans.
A series of events including loss of a job had seen them source many credit cards and then regularly roll the balance onto a new 0% balance transfer card. While the balance transfer can be attractive if you are working your way through paying off the debt, it is imperative that the old card be cancelled to avoid the temptation of using it when things get tough.
Unfortunately, in this case, the cards were retained and inevitably used. With almost 10 credit cards now at their limit and minimum repayments being made, the combined repayments along with car loan, personal loan and home loan now consumed almost 60% of take home income.
By refinancing and consolidating the debt, the clients were able to reduce repayments as a percentage of take home income to around 35%. The clients plan to pay above the minimum so that the loan term and overall cost can be further reduced but still be in a position to enjoy life with a little bit more cash available each week.
Interested in learning more? Click Here
To get in touch with your local YBR Adviser contact Craig Waters, YBR Wealth Manager on 03) 9757 8188.
We have you covered on all stages of your property journey