February 03, 2016
What is refinancing?
Refinancing lets you change your home loan to suit your new circumstances.
How does refinancing work?
When you take out a new home loan, you use some or all of the funds to pay out your existing loan.
The new loan often comes from a different lender, but many people refinance with the lender they've been using for years. If you move to a new lender, that lender will take care of paying out your existing loan.
What type of things do people refinance for?
- Renovating your home or other home improvements such as installing a pool.
- Paying off your debts such as credit cards by rolling them into your home loan.
- Obtaining a cheaper rate, even if it means giving up a few loan features.
- To raise cash for a purchase such as a car.
- You may want to switch from a variable rate to a fixed rate, perhaps to reduce the risk of higher repayments.
How will refinancing benefit me?
Refinancing can be a smart way to manage your money. Here are a few reasons why you may want to refinance:
- To get peace of mind with a fixed rate.
- To access a lower interest rate and reduce your monthly payments.
- To gain the flexibility to pay off your loan faster.
- To consolidate credit cards, personal loans or other debts to reduce your interest rate and monthly repayments.
- To unlock the equity in your current property to finance a renovation, purchase an investment property or free up some extra cash.
What do I need to consider when refinancing?
When done properly under the right circumstances, loan refinancing can be very beneficial. However, there are typically costs involved. The reasons for refinancing should be legitimate and the medium term savings should definitely outweigh the short-term costs.
Expert advice at no cost to you
As your local Mortgage Choice home loan expert, I can give you access to a wide choice of lenders including the major banks, and I understand the refinance requirements of these lenders. This will make it quicker and easier for you to refinance your loan.
Best of all, there is no charge to you for my home loan service because the lender pays me after your loan has settled.
For a free Health Check on your existing mortgage or for any aspect of the lending process, just ‘Ask Andrew’ by completing the contact form at the top right of this page or call on 9401 9244 or 0412 498 872.