Refinancing guide to unlock offset accounts & loan features

If you're a Central Coast homeowner wondering whether your current mortgage is working hard enough for you, refinancing might be the answer. Many borrowers stick with their original home loan without realising they could access valuable features that could save thousands of dollars over the life of their loan.

Why consider refinancing for additional features?

When you first purchased your property, you might have chosen a basic home loan package to get into the market quickly. Now that you've established yourself as a reliable borrower, lenders may offer you access to enhanced loan products with features that weren't available or affordable initially.

Refinancing isn't just about accessing a lower interest rate – though that's certainly one compelling reason. It's about upgrading your entire mortgage package to include features that can significantly improve your cashflow and reduce loan costs over time.

Understanding offset accounts and their benefits

An offset account is one of the most powerful features you can add through refinancing. This transaction account links to your home loan, and any money you keep in it effectively reduces the balance on which you pay interest.

For example, if you have a $400,000 mortgage and maintain $50,000 in your offset account, you'll only pay interest on $350,000. The money in your offset account remains accessible for daily expenses while working to reduce your interest payments.

Here's how offset accounts can benefit Central Coast families:

• Reduce your overall interest payments without making extra repayments
• Maintain full access to your savings for emergencies or opportunities
• No tax implications on the 'earnings' from interest saved
• Flexibility to withdraw funds whenever needed

Additional features worth considering

When you refinance your home loan, you might also gain access to:

Redraw facilities: Allow you to access extra repayments you've made, providing financial flexibility when unexpected expenses arise.

Loan portability: Lets you transfer your mortgage to a new property without reapplying, which can save time and money if you're planning to move within the Central Coast or beyond.

Multiple split rates: Combine fixed and variable interest rates within the one loan, helping you manage interest rate risk while maintaining some flexibility.

Higher loan limits: Access additional borrowing capacity to consolidate into mortgage other debts or release equity to buy the next property.

When refinancing makes financial sense

Refinancing to add features makes most sense when:

1. Your current lender doesn't offer the features you want, or charges excessive fees for them
2. You've built up substantial equity in your property
3. Your financial situation has improved since you first took out your mortgage
4. You're coming off a fixed rate period and want to reassess your options
5. You have significant savings that could benefit from an offset account

The refinance process for feature upgrades

The refinance application process typically involves:

• Property valuation to confirm your current equity position
• Income and expense verification
• Loan review to determine suitable products and features
• Comparison of current refinance rates and fee structures
• Settlement coordination between old and new lenders

Most lenders will require a loan-to-value ratio of 80% or less to access premium features without paying lenders mortgage insurance. If your Narara or Central Coast property has increased in value since purchase, you might now qualify for these enhanced loan products.

Calculating the potential savings

Before proceeding with mortgage refinancing, it's worth conducting a thorough analysis of potential benefits versus costs. Consider:

• How much you could save on interest payments with an offset account
• Whether you can potentially access a better interest rate
• What fees are involved in the refinance process
• How long you plan to keep the loan

For many Central Coast homeowners, the ability to save money refinancing through reduced interest payments and improved features outweighs the upfront costs involved.

Making your decision

If you're stuck on a high rate or missing out on valuable loan features, it might be time for a loan health check to see what options are available. The mortgage market constantly evolves, and what wasn't available when you first bought might now be within reach.

Consider whether you want to switch to variable or switch to fixed rates, and how features like offset accounts align with your financial goals. Some borrowers find that accessing equity for investment purposes or consolidating high-interest debts into their mortgage can significantly improve their overall financial position.

Refinancing your home loan to access valuable features like offset accounts can be a smart financial move that pays dividends for years to come. The key is understanding your options and choosing the right combination of rate and features for your circumstances.

Call one of our team or book an appointment at a time that works for you to discuss how refinancing could enhance your mortgage package.