Tips on Refinancing Your Home Loan
Home Loan
Mortgage Refinancing
Looking to switch home loans to save money or access extra features on your mortgage? Learn about refinancing your home loan with our tips and advice.
The big question often facing many homeowners is whether or not to refinance their home loan or see out the one they have. It can be an attractive option when you begin researching all of the cheaper rates offered by other lenders but paying a cheaper rate does not always result in you saving a lot of money by changing to a new lender.
Given the right guidance however, there can be a lot of money to be saved in refinancing your home loan – whether you change lenders or simply get a better deal from your current mortgage provider. Healthy competition means, both banks and specialist lenders are becoming more competitive with their refinance options. Due to the fact that refinancing now represents a good amount of the mortgage market, there are many lenders wanting to gain the attention of borrowers who have are better financially aware. This has resulted in Australian borrowers receiving more competitive refinancing options.
If you’re interested in discussing your options to refinance your home loan – contact a mortgage professional today.
HOW DOES A REFINANCING LOAN WORK?
A refinancing loan works by essentially ending your old loan and starting a new one with a new interest rate and mortgage term. Sometimes that even involves a new balance. Whether you choose to receive a new mortgage from your existing bank or a new lender, is entirely up to you. It is highly recommended that you shop around for the best deal as it is not always with your current provider. It is not always in the bank’s best interest to refinance your loan so don’t be put off by their lack of enthusiasm. If in doubt about your situation and options, it is wise to enlist the help of a mortgage broker as they have the industry knowledge and expertise to find you the best available offer.
Regardless of the decision you make, the mortgage lender granting you a new mortgage, will pay off your existing mortgage with the new one. That is essentially what refinancing means – redoing your loan. Most homeowners decide to refinance their current mortgage for one of two reasons: to cash in the equity accumulated in their home, or to acquire lower interest rates.
REFINANCING OPTIONS
When it comes to refinancing your home loan, the following options include:
Contact your mortgage broker today to discuss the option best suited to your needs.
As there are costs involved in refinancing, it’s important to determine how much you will save from refinancing compared to how much it will cost you to do so. It’s worth noting that the amount it will cost you initially is relatively small when compared to your potential to save a huge amount of money in fees and interest repayments during the duration of the loan. The costs you may face during the refinancing process and those added to your new loan include:
Tips to Improve Approval Chances
It may be possible for you to come to an agreement regarding some of these mentioned fees and if possible, it is advisable to have a mortgage broker act work with you to negotiate with your bank.
QUALIFYING CRITERIA
Financial Stability and Income Proof
In order to be eligible to refinance your home loan you ideally should have paid off more than 20% of your mortgage.
HOW TO APPLY FOR A REFINANCE
If you’re considering refinancing your loan, an experienced mortgage broker can help you to:
Just as you had to do with your original loan, you’ll need to provide all the same documents such as your:
Once your application has been submitted, the bank or mortgage lender may ask to have your property valued again. From this point a discharge form will be submitted to the Land Titles Office in your state. This process enables your old loan account to be closed. Your new mortgage then pay the debt of your old one and you begin paying your new home loan.
ADVICE, TIPS AND CONSIDERATIONS
When thinking of refinancing your home loan it is always best to consider every aspect of your situation and whether it’s in your best interest to proceed. Refinancing could be a good option if:
You may want to hold off on refinancing if:
Another tip:
It’s important to consider your motives. Do you want flexibility, a lower rate, lower fees, debt consolidation, or all of the above? It is not enough to only consider a lower interest rate. It important not to only focus on the competitive interest rates but the whole lifetime of the loan.
FAQs
Not sure? Have additional questions? Try here