The loan features you have on your current mortgage may no longer be suitable, and could actually be preventing you from achieving financial freedom. By choosing to refinance, you can potentially access a better interest rate and save tens of thousands of dollars over the life of your loan. You can also consolidate debt, or unlock equity within your home to fund renovations, buy a new vehicle, or use as a deposit on an investment property purchase. We’ve created this blog to explain what refinancing means and how to refinance your home loan.
What is refinancing?
Refinancing your mortgage is essentially evaluating your current loan and looking for a better deal. There are a few key reasons why you might consider refinancing:
- Seeking lower interest rates.
- If your credit score has recently improved, you may be able to secure a new loan agreement with better interest rates and features.
- If your circumstances have changed, your loan may no longer suit your needs. Refinancing your home loan allows you to choose a mortgage better suited to your current situation. What are the benefits of refinancing your home loan?
Why should I refinance my home loan?
Refinancing your home loan can help you to secure a better interest rate, saving you money. You will also be able to access better loan features, now and in the future. You may also be able to access equity to fund renovations, purchase new assets or use as an investment property deposit. If you have other debts you would like consolidated, you can also look into doing this to create more manageable repayments.
How often should you refinance your home loan?
The ACCC Home Loan Price Inquiry report recommended that lenders prompt borrowers to consider refinancing every 3 years. However, we believe that a reassessment should be carried out once a year for maximum benefit. This doesn’t mean that you need to do a complete refinance every 12 months. But a reassessment completed by an experienced mortgage broker will tell you if your home loan is still offering a competitive interest rate or whether you would be better off refinancing. Additionally, it’s important to do a home loan reassessment whenever you’re approaching the end of a fixed interest rate period. This is because most lenders will automatically roll a home loan over to their standard variable rate once the fixed rate term has concluded (which may be significantly higher than your current low fixed rate).
How to refinance your mortgage
If you’re considering refinancing your home loan, start by talking to a mortgage broker at Borro. That will allow you to explain what you hope to achieve from your refinance and get expert answers to any questions that you may have. We can then assess your current home loan and compare it with a wide range of mortgage products from a diverse panel of lenders. Once we’ve identified which home loan product will present you with the best possible results, we can then get started on your refinance application.
The process of refinancing is similar to what you would have experienced when you applied for your original home loan. The new lender will want to see evidence of your current income and living expenses, as well as recent statements from your current mortgage lender. They’ll also arrange for a valuation of your property to determine how much equity you currently have. The good thing about refinancing is that borrowers are often in a stronger financial position than when they were first home buyers. And the stronger your financial position, the easier it is for us to negotiate better loan terms. Once the refinance home loan has been approved, the new lender will arrange for your existing home loan to be repaid in full. You’ll then start making repayments to the new lender.
The experienced team of mortgage brokers at Borro can help you successfully restructure your finances, ensuring that when you refinance, you’ll always come out in front and achieve great savings. If you’re ready to start the process of finding a better deal, then contact us today on 1300 1 BORRO.
Refinancing your mortgage for better rates is a strategic financial move that can lead to substantial savings and increased financial flexibility. By staying informed, evaluating your financial situation, and carefully navigating the refinancing process, you can unlock the full potential of your homeownership journey. Whether you’re looking to reduce monthly payments, shorten the loan term, or consolidate debt, refinancing is a powerful tool that can positively impact your overall financial well-being.
The home loan process involves a fair bit of research and planning, but with the right preparation it doesn’t have to be a daunting endeavour. Our team of expert mortgage brokers can help you with your home loan needs. Book an appointment with one of our Borro brokers today or call the team on 1300 1BORRO.