If you’re nearing retirement and still have a mortgage, refinancing can help you save money on interest payments and potentially reduce your monthly payments.
As retirement approaches, many seniors are faced with the challenge of managing their finances and ensuring that they have enough income to support their lifestyle. One strategy that can help seniors to manage their finances is refinancing their home loan.
Refinancing can help to reduce monthly mortgage payments, access equity in the home, or secure a more favourable interest rate. In this blog post, we will discuss how seniors can seek a refinance before retiring and the benefits of doing so.
Benefits of refinancing before retirement
Refinancing before retirement can provide seniors with several benefits.
Firstly, it can help to reduce monthly mortgage payments and free up more cash for other expenses. With retirement income typically being less than their pre-retirement income, seniors may need to reduce their expenses to make ends meet. Refinancing can help seniors to achieve this goal.
Secondly, refinancing can help seniors to access equity in their home. This equity can be used to pay off debts, make home improvements, or supplement retirement income. Accessing equity can be particularly beneficial for seniors who do not have significant retirement savings or other sources of income.
Third, it can help seniors to secure a more favourable interest rate. This can lead to lower monthly mortgage payments and savings on interest over the life of the loan. This can be particularly beneficial for seniors who plan to stay in their home for the long-term.
Refinancing activity in Australia has increased in recent years. In April 2023, the total value of refinancing loans in Australia was $19.87 billion, according to the Australian Bureau of Statistics. This indicates that more Australians are taking advantage of low interest rates and favourable refinancing conditions.
Mechanics of home refinance
To refinance a home loan, seniors should first compare home loan products and find a lender that offers favourable terms and conditions. Seniors should look for a lender that offers low interest rates, low fees, and flexible repayment options.
Once seniors have found a lender, they will need to apply for a home loan. The application process typically involves providing information about income, expenses, assets, and debts. Seniors will also need to provide documentation, such as pay stubs, bank statements, and tax returns.
After submitting the application, the lender will review the information and make a decision on whether to approve the loan. If the loan is approved, seniors will need to sign the loan agreement and provide any additional documentation requested by the lender. The loan will then be disbursed, and the old home loan will be paid off.
The ASAG Reverse Mortgage
If you are a homeowner in your senior years seeking to refinance an outstanding mortgage, our equity release option may provide assistance. Through the ASAG Reverse Mortgage program, you can access the wealth held in your home without relinquishing ownership or selling the property. This allows you to obtain funds for a variety of acceptable purposes, including Senior Refinancing, while still enjoying your retirement.
If you require additional details on how our loan operates, our team at ASAG is available to help. You can reach us by calling 1300 002 724 or emailing us at info@asagfirst.com.au with any inquiries you may have.
Additionally, to initiate the process, you can utilise our tool below to evaluate your available equity.