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Why re-finance your home loan?
Make your money go further
Re-financing, is it right for you?
The decision to refinance you home loan is made when you realise your current home loan is no longer suited to your financial situation.
Wanting a lower interest rate, consolidating other debts into one easy to manage repayment and accessing your equity are just some of the reasons why you may choose refinance.
Before going ahead with the decision, make sure you’ve done your homework and sought professional advice to see if it’s the right choice for you.
Once you’ve made the decision to refinance your home loan, it is imperative to thoroughly consider all the options available to you, to ensure that re-financing a viable option for you.
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5 reason to refinancing and /or consolidating your debts?
Pay off your mortgage faster!
If you’re striving to be mortgage-free, there’s a good chance there may be a more appropriate home loan product to meet your needs.
Some mortgage products are designed to motivate borrowers to repay their mortgages quickly.
So now is the perfect time to talk to your mortgage broker and consider whether a new home loan will see you on the road to financial freedom – fast!
Consolidate your debts
When refinancing your home loan, this is an opportune time consolidate your other debts, such as credit cards or personal loans, into your home loan. This could save you thousands of dollars in interest charges. Rolling your debts into one monthly or fortnightly repayment can also help make juggling your finances a little easier while improving your cash flow.
Better interest rates and lower repayments
Interest rates and mortgage deals are constantly on the move. To make the most of a competitive mortgage market, you might want to evaluate the loan product you currently have.
For example, you may want a lower variable-rate or lock into a fixed-rate.
Before refinancing your home loan, you should approach you current lender to see it they offer you a better home loan deal first.
Avoid monthly fees and charges
Some lenders charge a monthly account keeping fee – further adding to your debt. Competition between lenders has increased and some now waive administration fees, so re-financing your home loan with another lender can be a smart move to help cut your mortgage costs.
Unlocking equity
Another benefit of re-financing your home loan is it gives you an opportunity to restructure you home loan for future purposes and to access your equity.
As you pay off your mortgage you’ll accumulate equity in your home. You can then use your equity for other purposes such as purchasing an investment property or debt consolidation .
As long as you are capable of meeting your home loan repayments, refinancing your mortgage can help you tap into the equity that you’ve built up.
Getting started
Frequently asked questions
Refinancing is when you change your current home loan to a new home loan that satisfies your current financial situation. Refinancing can be done as a internal refinance (stay with the same lender) or externally (refinance your home loan to a new lender).
The most common reason to consider refinancing your home loan is to obtain a better interest rate. However, make sure you account for all the fees involved to refinance. Depending on your reason to refinance you need to see if you are saving a enough on interest and fees to make the process a viable option. If your LVR (loan-to value-ratio) is over 80% then you could also be required pay Lenders Mortgage Insurance.
The costs to refinance could include:
- Discharge fee from the existing lender
- Lender establishment fees
- Mortgage Registration fee
- Mortgage registration fee
- Fixed rate break costs if you are breaking a fixed rate home loan
- Lenders mortgage Insurance of the loan is above 80% LVR
Give us a call 0401 388 153 and will review your situation to see if refinancing to the right option for you.
The benefit of consolidating other debts into your home loan are you could have lower monthly repayment and also save on interest costs. However, you need to be mindful that you are paying these debts over a longer time (up to 30 years). Even though your scheduled loan repayment may be lower, the secret is keep paying the higher loan repayment and pay off your home loan years earlier.
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You could request a shorter loan term, rather than starting a new 30 year loan term. Depending your personality regarding credit, if are tempted to just make the lenders minimum repayment and not be disciplined enough to keep paying the higher repayment, then selecting a shorter long term might be the best option for you.
Reasons for wanting to refinance your home loan can vary for everyone, depending on your personal situation.
Some of benefits refinancing could be to:
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James Sylvester commenced Mortgage Brokering in 2009 and launched the Mortgage Broker Brisbane business "Your Home Loan Consultant" in February 2012.
James Sylvester
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