Ok, so you’re thinking about talking to somebody about home loan refinance. Refinancing can be a great way to save money on your monthly payments, or get cash out to pay off debt or make home improvements. You’ve probably heard all this already, but you need just a little bit more convincing, yes?
I understand that refinancing a big decision, and there are a lot of things to think about before you pull the trigger. So if you’re on the fence, stay with me as I tell you more about why taking out a refinance home loan can be the right move for you.
How does refinance work?
Here I’ll answer some of the most frequently asked questions about refinancing to put us all on the same page.
“Can I refinance my home loan?”
If you’re wanting to refinance your home loan in Australia, there are a few things you’ll need to consider first. The biggest factor is usually whether or not you’ll be able to get a better interest rate elsewhere — if not, it’s probably not worth refinancing. You’ll also need to make sure you don’t have any exit fees attached to your current home loan, as these can sometimes outweigh the potential savings from a lower interest rate. Once you’ve considered all of that, it’s time to start shopping around for a great refinance home loan offer from different lenders.
“How long does it take to refinance a home loan?”
It typically takes around two to four weeks. This is assuming all the necessary documentation is in order and that there are no unforeseen delays.
There are a few things that can affect the timeframe for refinancing a home loan, e.g, errors in your loan application, or misunderstandings between your lender and yourself regarding your paperwork. Another factor that can affect timing is how quickly your new lender can get their valuation done.
In general, though, you can expect the whole process to take around four weeks from start to finish.
“What are the costs to refinance home loan?”
They usually include things like application and settlement fees, as well as charges for drawing up or changing the loan contract. You may also have to pay early repayment penalties on your current loan, or valuation and legal fees. So it’s important to speak with a refinance broker before making any decisions so you’ll know exactly what costs will apply in your specific case.
Why refinance home loan?
I could go on for ages on reasons people check out home loan refinance offers but instead I have put together 6 great reasons to refinance so you can get the bulk of it in under 5 minutes. Not in any specific order…
Reason #1 – Rates & Saving Money
Lower interests rate? Or, saving money? Wait, are they same thing?
All to often people come to us simply saying “what rate can you get me?” Whilst interest ratesare very important they are not the ‘be all and end all’ of a home loan, often there are other features that can come into play that also save you money in the long term and allow you more options and flexibility.
Any good refinancing mortgage broker will go over you needs and objectives before recommending a home loan and often may not be the cheapest rate on the market but is likely to be cheaper for you when all aspects considered.
Either way, for most people there are plenty of savings out there. On average we see about $200 per month saved on a simple $ for $ refinance.
Reason #2 – Secure a Low Rate Before You Miss Out – Fixing
The Australian home loan market has been in a bit of a spin over the last year or so, most has been behind the scenes but ask any good broker they will say there has been more changes over the past year than in the past 10 years!
As a result interest rates have been divided into many categories, so choosing the right product can make a massive difference on the rate, considering this and the fact that many economists are saying that rates will be going up over the next 5 years I believe there has never been a better time to lock in a super low fixed rate while you still can.
Reason #3 – Changing Home Loan Products
I covered most of this off in the above so I wont bore you going over it again, basically, if your more of a gambler and prefer to stay variable then I would still strongly suggest having your broker review your home loan to see if the product your on is still the cheapest and/or most suitable for your needs.
Reason #4 – Had Enough of Your Current Bank? How About a Finance Adviser ‘On Tap’ for life?
People are slowly realising the importance of good advice, even the younger generations are starting to see that professional advice over google answers is a no brainer…
Good mortgage brokers will be there for you not just to write a home loan but to also do things such as:
- Answer the phone whenever you call and take the time to answer your questions
- Annual reviews on your home loan
- Keep on eye on the market and let you know if anything happens that may effect you and your family
- Valuations on your property at your request or even sometimes doing these without being asked just to keep adding value to your life
- Make changes to your finances anytime you request
- Let you know they are always there to help, very rarely should you need to contact the bank directly.
Reason #5 – Cashing Out to Renovate
Have you been dreaming of renovations for some time now? Well what if I told you we often see many of our clients accessing equity to get those reno’s done without even seeing their monthly mortgage repayments increasing? Sound to good to be true? Well I can tell you its not because I have seen the proof, its quite simple really.
If we increase a home loan from $500k to $550k but at the same time we reduce the interest rate by 1% or more the repayments will actually reduce slightly and the extra $50k can be used for that new kitchen, bathroom or new deck you may be after.
Reason #6 – Cashing Out for ???
There are many other great reasons why people refinance and pull some extra cash out, here is a small list of a few that come to mind.
- Deposit for a new property
- New car
- Holiday
- Wedding
- Invest in shares
And the list goes on….
When can you refinance a home loan?
Home loans can be refinanced at any time, although there may be restrictions if you have a fixed rate loan. In Australia, most lenders will allow you to refinance your home loan up to six months before the end of the loan term, and up to three months after the end of the loan term.
You can also refinance as long as you meet the lender’s eligibility criteria. However, it’s usually best to wait until your home has increased in value since you purchased it, as this will give you a better chance of securing a lower interest rate.
Do I need a mortgage broker to refinance?
Truth is you don’t really need a mortgage broker to refinance. You can go through your bank or any other lender. However, it’s always a good idea to get the opinion of refinance mortgage brokers, especially if you’re looking to get the best home loan refinance deal possible.
A mortgage broker will be able to show you the ropes on how to refinance a home loan and find you the best deal on your refinance. So if you’re thinking about refinancing, it might be worth getting in touch with a broker.
If you would like any more info on any of the above please don’t hesitate to get in touch with us today, we are always happy to help.
Thanks for reading!