The spread of terror by the growing Coronavirus disease, also known as COVID-19, has disrupted the daily lives of everyone globally. The strict measures implemented to stem the spread of the virus has caused a huge hit even towards the economy, pushing many businesses to close down due to a lack of profit.
While this may become troublesome for those with rent and mortgages, the ease on evictions all around the globe has given some respite for those who just recently lost their jobs. Despite this, however, the current situation may prove it beneficial to look into refinancing your loans, as this can potentially ease your debt later on.
To cement this point, here are three reasons why refinancing your mortgage during the COVID-19 pandemic is the best option to improve your overall cash flow.
To get lower interest rates
On a general basis, the purpose of refinancing your loans is to get better interest rates than the one you’ve had previously. Due to the recent actions of the Reserve Bank of Australia, a majority of banks have imposed rate cuts, dropping interest rates to an incredibly low range. The lowering values in the property market have affected this as well, which makes it the perfect time to jump into refinancing.
By having lower interest rates, your monthly payments will inevitably lower—allowing you to save more money that can ultimately help you during these trying times. Furthermore, this means that your overall savings will be much higher, as the accumulated cost of your interest payments will be much lower than previously. To top it off, lower repayments will inevitably increase the equity of your home, giving you all the more reason to push through with financing.
To have shorter loan terms
Beyond the simple savings brought by the lowered interest rates, you can now renegotiate for shorter loan terms, allowing you to get out of debt much sooner. The lowered interest rates allow you more financial strength to push for a reduced loan life. By paying on a shorter time period, you can also gear for the future without having to worry about paying mortgages.
Shorter loan times will make you more financially stable in the long run, thus allowing you to redirect your finances towards more investments in the future. This will also, in turn, generate more savings, as longer time spans mean more total interest paid to clear your debt.
To go according to need
More than simply taking opportunities, however, the importance of loan refinancing is to ensure that you’re capable of managing your finances. Due to the worsening conditions of the market, cash flow is stemmed on all areas—bringing the problem of financial security to the forefront.
In certain cases, this might mean that restructuring could potentially hurt you in the long run, but if circumstances are dire enough to need it, then it might still be a wise condition to go through with it. By looking for the best loan for your situation, you can ease your quality of life through this horrible pandemic.
Conclusion
By choosing to refinance your loan, you can make your situation better throughout the COVID-19 situation. With the state of the market as it is at the moment, now is the best time to consider refinancing—it could potentially save you more money in the long run.
All of our Finance Managers at FinanceCorp are fully qualified, trained and experienced mortgage professionals who live and breathe finance.
Are you looking for a finance broker to help you with your mortgage in Perth? Get in touch with us today and have one of our finance experts look into your current situation!