START SAVING THOUSANDS ON YOUR HOME LOAN
Your life never stands still, and neither should your mortgage. If your home loan no longer fits your current circumstances, you could be wasting thousands of dollars a year on extra interest and fees. Have a quick chat with us to see if refinance is an option for you. We can find you a more suitable loan on a more competitive rate.
Good reasons to consider refinancing
1. Get a lower interest rate
The home loans market is highly competitive and interest rates can vary significantly between lenders. One of the most common reasons for refinancing is to get a lower rate, and over time this could help you save thousands of dollars. A mortgage broker can help assess your situation and help you find a better rate with the lending facilities you need, sometimes this means helping you negotiate with your existing lender on a better deal. Remember, a lower rate may not have all the benefits of your existing loan, be sure to consider factors like fees and features when deciding to make the switch.
2. Change your loan type
You may want to switch from a variable loan to a fixed loan to lock in a low interest rate with either your existing lender or a new one. Or you may want to change to a spilt loan, which has part variable and part fixed rate. Depending on the type of mortgage you have, this may require refinancing.
3. Access the equity in your home
As you pay down your mortgage and property values increase, the equity you have in your property builds up and becomes a valuable asset. By refinancing, you can access that equity to generate funds to use in a variety of situations; including home renovation and a deposit on an investment property.
4. Consolidating debts
Home loan interest rates are often lower than those for other forms of credit, so you can save money by consolidating debts such as credit cards or personal loans into your mortgage. However, it’s important to note paying off a short-term loan over a longer period will likely incur extra interest and fee over the longer term, so put the money saved from consolidating your debts into your mortgage to help you pay off your debts faster.
The refinancing process
We will evaluate your circumstances and help you submit your application. You’ll need to provide identification documentation, proof of income and list your assets and liabilities.
Lenders will often require a valuation on your home to determine how much you can borrow. This bank valuation generally requires an inspection of the property by a licensed valuer.
Once the lender is completely satisfied, full loan approval is granted. You’ll receive an approval letter with a copy of the loan contract to review and sign. Your lender (or your new lender if you’re changing lenders) will arrange settlement of your existing loan and establishment of your new loan.
How much does it cost to refinance
On average the cost to refinance ranges from $600-$800, depending on your existing and new lender. It's important to factor these in your decision process and speak to a trusted broker who can help you work out the numbers, sometimes a broker can find deals that can by-pass some of these fees.
1. Break cost
These fees apply when you refinance within a fixed period of your home loan. For example if you are on a 3 year fixed interest product and decide to refinance after the first year, your existing lender will charge you a break cost.
2. Discharge fee
This is an administration fee paid to your current lender to prepare the paperwork to pay out your existing loan.
3. Application fee
This relates to the cost to set up your loan application with the new lender.
4. Valuation fee
Your new lender may charge a fee to have your property valued by a professional property valuer.
5. Lender Mortgage Insurance (LMI)
If you have less than 20% equity in your property, you new lender may charge you LMI to protect them against mortgage default.
6. Ongoing fees
These include monthly fees payable to your new lender like annual account fees.
Potential savings with refinancing
Take a look an example below to see the potential savings achieved by refinancing an existing home loan.
Zara has an existing
home loan with Commbank
Loan value- $500,000
30 year loan
5 year Interest only option
Interest rate 4.8% p.a.
If we refinanced her loan to 3.8% p.a., Zara could be saving $25,000 in the 5 first years.
If Zara's existing loan was Principal and Interest.
With refinancing to a lower rate, Zara could be saving over $100,000 for the life of the loan.
Why work with a broker to refinance your home loans?
1. Finding the right deal for your situation
When it comes to refinancing your home loan, the most common thing people do is to compare rates. Comparison by rates is by no means difficult, however it does become more complex when you start to look at features and types of facilities you need. This is where engaging a broker can really help.
2. Explore all your options by speaking to just one person
Unlike lenders, a mortgage broker has access to hundreds of loan products across a range of lenders. If one product doesn’t suit you, we can explore others. It is important to know, rates are standard regardless of how you apply for your new loan, the rates provided by your broker will be the same as the lender. However mortgage brokers are savvy and know the different promotions available across the different lenders and can quickly advise if you are eligible for any promotions.
3.When your loans are complex, seek advice
If you have a number of properties or want to grow your property portfolio, getting the right guidance early is key. A good mortgage broker can help you structure your loan and help you plan for the future. Don’t just settle on lower rates, sometimes having the right loan structure can unlock more borrowing capacity in the long run.
4. Mortgage brokers do not charge a fee
This is the best part, mortgage broker do not charge a fee as we are paid by the lenders. So why not let us find you the best loan and manage the whole application process, while you sit back and relax.