A cashback offered by banks has been an attractive incentive for refinancing. However, as some banks phase out these cashback offers, it’s necessary for people to understand the importance of refinancing and the benefits it can provide, even without cashbacks.
In this article, we will delve into:
- Why was the Cashback Retracted?
- Why Seniors Should Consider Refinancing
- Navigating the Refinancing Process
Why was the Cashback Retracted?
The end of refinancing cashbacks first came to light when the Australian Financial Review covered CommBank’s decision to end a $2k cashback for refinancings and new mortgages filed after 1 June 2023. The move came in the wake of industry feedback over simplifying loan terms and even after the bank recorded $2.6 billion in Q3 FY23 profits.
NAB is also taking a cue regarding its $2k cashback, setting an application deadline of June 30 with drawdown by September 30. Westpac is ditching its $3,500 offer on June 30.
As of presstime, ANZ Bank has not yet announced plans regarding the fate of its cashback programme, and there are over 25 other lenders offering cashbacks, according to RateCity.
Why Seniors Should Still Consider Refinancing
The cashbacks offered by banks have been enticing for anyone who’s considering refinancing because of numerous benefits, even without cashback incentives, which may include the following.
Refinancing can provide seniors with the financial flexibility and resources to enhance their retirement planning. Accessing equity in their home can fund travel, medical expenses, home improvements, or other retirement goals without relying solely on their savings or pensions.
Seniors who have accumulated multiple debts, such as credit cards, personal loans, or high-interest mortgages, can benefit from refinancing. Consolidating debts through refinancing can simplify seniors’ financial obligations.
Instead of managing multiple repayments and interest rates, they can streamline their debts into a single loan with a more manageable payment structure. This simplifies their finances and may result in lower interest rates and overall monthly payments.
Lower Interest Rates
Refinancing offers an opportunity for seniors to secure a lower interest rate on their home loan. With interest rates constantly fluctuating, a lower rate can help with significant savings over the long term, reducing monthly mortgage payments and improving cash flow.
Flexibility in Loan Features
Refinancing provides seniors with the chance to explore different loan features that better align with their needs and lifestyle. This may include options such as flexible repayment terms, redraw facilities, or the ability to switch between variable and fixed interest rates.
Negotiating favourable loan terms can save thousands of dollars over the life of the loan.
Navigating the Refinancing Process
- Evaluate your goals and needs. Before embarking on the refinancing journey, assess your financial goals and needs. Determine why you want to refinance, whether it’s to access equity, reduce debt, or secure a lower interest rate. Understanding your objectives will help guide your decision-making throughout the process.
- Research lenders and loan options. Research on different lenders and loan products to find the best fit for your circumstances. Look for notable senior refinancing lenders which offer specific features tailored to your needs. Consider factors such as interest rates, loan terms, fees, and customer reviews to make a logical choice.
- Seek professional advice. Consult with a mortgage broker or financial advisor who specialises in senior refinancing. They can provide valuable insights and guidance tailored to your specific situation. These professionals can help you navigate the complexities of the refinancing process, understand the available options, and assist in selecting the most suitable loan.
- Assess costs and benefits. When considering refinancing, carefully evaluate the costs involved. These may include application fees, valuation fees, legal fees, and potential exit fees from your current loan. Compare these costs with the potential benefits, such as reduced interest rates or debt consolidation savings, to determine if it’s financially viable for you.
- Gather necessary documentation. Prepare the required documentation to support your refinancing application. The required documents may consist of evidence of income, bank statements, tax returns, and identification papers. Having these documents ready in advance will streamline the application process and prevent unnecessary delays.
- Review the terms and conditions. Before committing to refinance, carefully review the terms and conditions. Pay close attention to interest rates, repayment terms, any applicable fees, and any special features or limitations. Seek clarification on any points that you do not fully understand to ensure you are comfortable with the terms of the loan.
- Monitor market conditions. Monitor market conditions and observe trends in interest rates. If rates continue to drop or more favourable loan options become available, you may consider refinancing again in the future. Regularly reviewing your loan and staying informed about market changes will help you maximise your financial benefits.
The ASAG Reverse Mortgage
As seniors approach retirement, financial stability becomes a key priority. One avenue to explore is Senior Refinancing through a reverse mortgage.
With the ASAG Reverse Mortgage program, you can tap into the value of your home without giving up ownership or selling the property. This provides you with access to funds that can be used for various acceptable purposes.
If you need more information about the workings of our reverse mortgage, the ASAG team is ready to assist you. You can contact us at 1300 002 724 or send an email to email@example.com with any enquiries you might have.
Furthermore, to begin the process, you can make use of our tool below to assess the amount of equity available to you.
DISCLAIMER: This article is for informational purposes only and is not meant to constitute official financial advice. The Australian Seniors Advisory Group has no relationships with any company mentioned. Please consult a retirement planner for your options.