Things in life change – and that includes interest rates, your circumstances and goals. When they do, it could be time for your home loan to change too. It’s a way you could potentially save money, trim your mortgage and ultimately, get a better deal. You don’t have to go it alone – with a broker doing the legwork with your best interests at the heart of all recommendations, refinancing can be easier than ever.
Why refinance?
There are many reasons why people choose to refinance. Lenders rarely reward customers for being loyal, so it’s a good idea to regularly check to see if there is a better-suited loan for you. Some benefits can include:
Interest rates regularly change. Is yours still competitive? If you have a variable rate, or your fixed-rate is due to expire, you may be able to negotiate a lower rate with your lender, or find one that will.
Not all home loans are packaged equal. They offer different features and functionalities. Switching to a loan that allows more regular or extra repayments, an offset account or redraw facility can help you pay less over the life of the loan. Or, if you aren’t using features with your existing loan, switching to a more basic loan could save you in fees.
If you have multiple debts, such as a personal loan, car loan or credit card, you may be able to roll them into your home loan. This consolidates your debt to one repayment and could save you in interest. We will consider the whole picture including fees and repayments to determine if debt consolidation is right for you.
Whether you’re planning a renovation, need to upgrade your car or have another project in mind, if you have grown equity in your home, you may be able to refinance to access more money to fund it.
The right time to refinance.
Finding a lower interest rate isn’t the only reason why you may choose to refinance your home loan. If it has been more than a year since you last compared your home loan, or your circumstances have changed, it could be a good time to check if you would be better off refinancing. Some other reasons you may consider refinancing include:
Fixed-rate expiring
If your fixed-rate term is due to expire in the upcoming months, it is a good idea to find out your options. Often, when a fixed-rate expires, you will be automatically transferred to the lender’s variable loan, which may not be competitive or suit your needs.
Your equity has grown
If you have been making your home loan repayments, it is likely the equity you own of your home has increased. If this is the case, lenders may be willing to offer you a lower interest rate.
Your credit score has improved
If your credit score has changed for the better since you took out your home loan, it is possible you could be eligible for a lower interest rate. It is always worth asking the question.
Your income has improved
If your situation has changed, you may now qualify for lenders that weren’t previously available to you. Whether due to a new job, or your accountant finally completing your tax returns that weren’t available when you took our that low-doc loan, it’s definitely worthwhile to review your borrowing options when you have a major change.
How to refinance.
The thing is, refinancing can be made simple with a broker. Here’s what the process looks like.
We’ll take the time to understand your circumstances and goals and review your current mortgage, including any exit fees or additional costs.
Next, we compare your loan with others offered by dozens of lenders to see if you could be better off somewhere else. You will receive a shortlist of our recommendations, which may include renegotiating with your current lender.
When you’ve made an educated decision, it’s go time. We do the legwork for you from application to settlement. We then regularly check in to make sure your loan is still working hard for you.
Loan types and features
There are a number of loan types and features that you might want to consider for your refinancing home loan, scroll through some of the options below to get a better understanding of what the differences are. We’re here to answer your questions when you’re ready.
Variable Rate Loan
As the name suggests, the interest rate can change over the life of the loan. This gives you flexibility, but can also leave you open to rate rises. These loans can also offer the option of additional repayments and redraw, as well as offset accounts.
Fixed Rate Loan
Basically, this is the opposite of a variable rate loan. Your interest rate and repayments will stay the same during the fixed term, no matter what. So no surprises. You can’t make extra repayments during the fixed term though, so it’s worth thinking about a split loan if you’re planning to pay extra.
Split Loan
The best of both worlds – you’re able to fix part of your loan, while leaving the rest variable.
Packaged Loan
Professional packages offer discounts on standard variable and fixed rates, the waiving of fees, and in some cases, great deals on other products from the same lender. A packaged loan usually comes with one annual fee for the bundled products.
Line of Credit Loan
This gives you flexibility and easy access to cash for renovating or investing. It lets you draw against the loan balance, up to a credit limit set by the lender.
Interest Only Loan
As the name suggests, you only pay the interest on the principal balance for a set term, with the principal balance unchanged.
FAQs about refinancing.
Refinancing can help you secure a lower interest rate on your home loan, consolidate debts or even pay off your loan faster. However, there are some hidden fees. These include the discharge, application and settlement fees.
In almost all scenarios you are not required to pay a fee for our services. Instead, we’re paid a commission by the lender you choose through. Learn more here and get in touch if you have any questions.
Each interest rate depends on loan type, repayment plan and several other factors. This means a good interest rate for you may not be a good interest rate for someone else. Get in touch with me today to to find out which loan type, repayment plan and lender will give you a competitive interest rate for your needs.