Whether it be a home or investment property loan, the regular contributions you pay can be a big part of the monthly budget. With interest rates at historical lows refinancing to get a better deal seem like a no-brainer. However, the decision needs to be made carefully.
If you’re thinking about refinancing and to know if it is the right option for you, use this simple five step guide and consider Mortgage Choice at Noarlunga for a Homeloan Health Check:
1. Ask yourself why do you want to refinance
You should know why you are considering refinancing. Are you looking to access equity in your existing property to say, buy or renovate an investment property? Or is your aim to reduce your repayments, consolidate your other debts into your mortgage, or just to pay off your loan sooner? Your goal will influence your loan choice and ultimately your decision to refinance.
2. Understand your existing loan better
Before you start shopping around, make sure you fully understand all aspects of your existing property loan. This includes your interest rate, type of rate (variable, fixed or split), the available features and any fees. Keep in mind that while mortgage exit fees were abolished in 2011, some existing loans may still have them attached. Contact your local mortgage broker to find out if this applies to your current loan and if so, keep an open mind as there are plenty of deals on offer that could still make refinancing worthwhile.
3. Determine your current and future needs
Once you have a clear goal and a better picture of your current home loan, it’s important to know what loan features you need. Do you want the cheapest loan no matter what or do you want loan flexibility that gives you the ability to make extra repayments and redraw funds in times of need? If you choose to go ahead and refinance, knowing what loan aspects are important to you now and in the future will make the decision process easier.
4. Shop around and be prepared to negotiate
There is an abundance of loan products on offer from a wide range of lenders, so make sure you check out as many options as possible. A professional mortgage broker such as Mortgage Choice can help you do this, usually at no cost to you.
5. Work out the total cost of refinancing
Many loans may initially look cheaper than your current loan due to a lower interest or fewer fees, but it’s important to do a full cost versus benefit analysis of switching from one loan to another. This will help you sort the fact from the fiction before making your decision.
Our local team will help guide you through the process, making buying that property easier.
Contact Fiona Manley at Mortgage Choice in Noarlunga on 0421 360 205.
Or visit www.mortgagechoice.com.au/steve.pratt for more information. #fionamanley