Your current loan may have been perfect when it first begun. However, as time passes your needs and circumstances change. You may need to revaluate your current loan and switch over to a new loan which better satisfies your current circumstances and lifestyle.
Australian lenders are fiercely competitive and are continually trying to improve their rates and products for consumers. By refinancing it allows you to take advantage of these great offers being made available and change your existing loan to one that is more suitable to your current situation.
Refinancing a mortgage is basically when an existing loan is paid down and then replaced with a new one. There is many common situations why a homeowner would consider refinancing, such as:
- A change in financial circumstances since the initial loan application
- In order to receive a lower interest rate
- Not happy with the current lender
- Wanting to change loan term; converting from variable to fixed rate
- Wanting to access equity from the current home to finance other purchases
- Wanting to consolidate multiple loans
- Does your current loan match your lifestyle and financial situation?
- Are you planning to start a family? How will this affect you financially?
- Would you like to use specific loan features tailored to your needs?
- Are you considering renovating your home?
- Is your fixed rate loan on the verge of expiration?
- Would lowering your interest rate help you make repayments on time?
- Would you like to change your current loan to a fixed or variable rate?
- Could you use the equity in your home for an investment opportunity?
There is a large range of benefits to refinancing:
- Consolidation of loans and personal debt.
- Lower interest rate.
- Helping to fund home renovations.
- Access to home equity.
- Helping you adapt to changes in personal circumstances.
- Better service from lenders
- Manageable home loan
- Different loan features
The cost of refinancing can vary between each borrower. It is essential to understand the costs involved before completing the refinancing process.
Some costs may include:
- Lenders Mortgage Insurance; applied if you borrow more than 80% of the value of the value of your property.
- Application, documentation, settlement and handling fees
- Valuation fees
- Discharge fee from your existing mortgage
- Registration fees