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According to the research, only 13% of respondents said they had refinanced their investment loans in the last six months, while almost 60% of respondents said they were not likely to refinance their investment loan/s in the next 6-12 months.

It’s quite surprising given the wall-to-wall media coverage there has been surrounding the ‘refinancing tsunami’ expected as more fixed-rate loans expire.

However, of the 13% of investors who had refinanced, more than half (55%) said they did so to save money on loan repayments. Here are some other reasons why investors should consider refinancing their investment loan/s this year.

Tap into equity

Refinancing can give investors access to equity, which can be used for other investments or to improve their property. With property prices continuing to rise, refinancing can be an excellent way for investors to tap into their property's increased value and access additional funds. According to YIP’s research, tapping into equity was the second most popular reason given for refinancing (41%).

Fixed loan period expiry

Another reason why investors should consider refinancing in 2023 is that many fixed-rate loans will be expiring. When investors initially took out their fixed-rate loans, they may have locked in a low-interest rate for a set period, typically between one and five years. However, when these fixed-rate periods expire, investors may be subject to higher interest rates, making it a good time to consider refinancing to a new fixed or variable rate loan. By refinancing before the fixed-rate loan expires, investors can potentially avoid higher interest rates and secure a better loan product. Only 11% of respondents said this was the reason they refinanced their investment loan, but this number is expected to creep higher as more fixed rate loans expire.

Pay less in fees

When refinancing, investors may be able to negotiate lower fees or even have some fees waived altogether. For example, many lenders charge application fees, valuation fees, and exit fees for paying off a loan early. By refinancing, investors can shop around for a lender that offers lower fees or negotiate with their existing lender to reduce or waive fees. This can help investors save money in the short term and reduce their overall loan costs.

Add or remove loan features

When refinancing, investors can choose a loan product that better suits their current financial situation and investment goals. This includes the ability to add features such as an offset account, redraw facility, or the ability to make extra repayments without penalty. Alternatively, investors may want to remove certain loan features that they no longer require, such as a split loan facility. By refinancing, investors can customize their loan to better suit their needs and potentially save money on loan fees and interest charges.

Save money on loan repayments

Of course, one of the biggest reasons investors consider refinancing is to save money on loan repayments by securing a more competitive interest rate. When the RBA raises the cash rate (as they’ve done ten times at the time of writing), it leads to an increase in interest rates for loans, including mortgages. By refinancing, investors can potentially secure a lower interest rate, reducing their monthly repayments and overall loan costs.

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