Refinance Home Loan
Are you thinking about refinancing your home loan? If so, the most important thing is to think about the features that you’re looking for in a new home loan. Do you think you’d receive a better interest rate or for instance greater flexibility with a new loan? Knowing what you consider important to you will help you compare and weigh up different options to ensure that you will be able to find the loan that best suits your needs. In addition, it might be a good idea to compare your financial situation now with your financial situation at the time you got your previous loan. Circumstances may have changed, making it easier or harder to get a new loan now compared to before.
So, the important question is, how do you know whether you should refinance your home loan?
At Hunter Galloway, we have considerable experience in conducting home loan refinancing for a wide range of different customers. Over the years, we have managed to streamline the mortgage refinancing process for you, making it easier to navigate than if you were doing it independently. Take a look at the steps that one of the mortgage brokers at Hunter Galloway can help you with:
- Shop around for a mortgage according to a set of predefined criteria;
- Make recommendations on a suitable mortgage for you according to your financial and personal preferences;
- Help you compile the necessary documents to apply to the chosen lender;
- Help you with any potential revaluation of your existing property that your lender may require.
How To Refinance Loans
When refinancing your loan, there are certain pitfalls to watch out for. For instance, if you are prolonging your repayment period, although your monthly payments might decrease, you could end up paying much more interest in the long run. This will mean that your loan will be longer and more expensive overall. On the other hand, if you opt to shorten the length of your repayment period, you might end up straining your monthly budget by making your loan payments much more expensive (even though you will end up paying less overall). Weighing between the two different options is crucial and our mortgage brokers at Hunter Galloway will be happy to help you decide between them.
Refinance Home Loan Advantages
There are many advantages to refinancing your home loan. One of the choices available to customers is the home equity loan cash out. This is an excellent option that allows us to help our clients cash out on any of the equity that has accumulated since the home was initially purchased. The cash that you receive as a result of this type of refinancing might be used for a variety of different reasons. Take a look at a summary of some of the cash-out purposes of refinancing your home loan:
- Consolidating other debt, i.e. credit card or student debt
- Home improvements
- Purchasing a new vehicle
- Going away on a holiday
- Investing in your children’s education
However, refinancing your loan in order to access cash that has accumulated over the years in equity is not always an entirely clear-cut process. You may be interested in how much cash you can access at any given time? What is your overall borrowing capacity? In order to make sure that you have all of the necessary information for this option, feel free to contact our team at Hunter Galloway for more details. One of our mortgage brokers will be happy to assist you in getting all of the relevant information to secure the best possible deal on your cash-out refinancing.
There are many reasons that you may be motivated to refinance your home loan this year. Whatever your motivations, our team at Hunter Galloway will be able to assist you. If you have been paying off your loan for more than 4 or 5 years, it is quite possible that you are eligible to refinance your loan. However, in order to do so, you should review your current loan as well as your wider financial situation.
If you are interested in receiving assistance throughout your refinance journey, feel free to contact our team for more information. Whether you are just browsing the possibilities or you are set on refinancing, feel free to get in touch for a free consultation at 1 300 088 065 today!
Frequently Asked Questions
How will refinancing benefit me?
Refinancing will benefit you in a number of ways:
- Consolidate your debt
- Get a better home loan product with more flexible features
- Invest using the equity of your home
- Property renovations
- Refinance to achieve personal goals
When can I refinance my mortgage?
Generally every two years it’s good to review your mortgage, however, it also depends on your circumstances. Refinancing is a good way to ensure that you are still getting the best rate available.
What are my mortgage refinancing options?
There are a number of different refinancing options that you can change to when refinancing:
- Redraw Option: The option to withdraw any added repayments and use that amount in cash. It’s possible to find a lender that offers free redraws which can be easily arranged online or via phone banking.
- Portability: Take your loan with you even when you buy or sell property. This can save you from extra fees and charges.
- Offset Facility & Flexible Repayments: If you have spare cash, you may deposit it in an ‘offset’ account or add it to your regular repayments. This helps to reduce the loan term and could, over time, generate a substantial saving on the interest you pay.
- Flexible rate options: Manage interest rate fluctuations in the market with more flexibility by moving between fixed and variable rates, or timely combinations of the two.
Can I refinance a mortgage if I have bad credit?
This comes down to finding the right lender that will still review your application along with a promising outlook that you’ll be making a conscious effort to improve your credit rating.
Steps will need to be taken such as getting a copy of your credit file, trimming your debt, working closely with a mortgage broker and specialist lender along with borrowing less than 80% LVR.
What do I need to consider when refinancing?
There are a number of things to think about prior to refinancing. Speak to your mortgage broker and figure out whether you will be better off refinancing, along with any ongoing costs associated with your mortgage and switching to a new one. Refinancing comes at a cost so it’s important to ensure that you are aware of the expenses involved. Often these costs a minor compared to the money you will save on interest and fees over the life of your loan though.
To ensure eligibility when refinancing, you should have less than 80% owing on your home loan, ideally be on a variable rate, or also refinance out of a bad credit loan.
Be aware that you may pay LMI twice:
When it comes to refinancing, LMI can negate interest rate savings in several ways:
- Individual lenders can charge different LMI premiums. Considering the dollar value of your mortgage and its loan-to-value ratio (LVR), one lender’s premium could be thousands of dollars more than another. If your loan requires a high LVR you will need to consider the LMI cost. For example, a lender with a slightly higher interest rate may turn out to be a better option if their LMI premium is lower than the competitors.
- LMI is non-transferable; even if you’ve already paid it when you bought your home, you may be required to pay another LMI premium when refinancing. You can add LMI to the loan principle which increases the total amount of the loan (in some cases this may negate the benefit of refinancing).
Insider Tip: It may be possible to claim a rebate for the LMI once your policy expires but it is usually your responsibility to request it from the lender. Many borrowers fail to claim any rebates that may be available to them. You could receive back as much as 40% of the original LMI premium – often a substantial sum of money.