Refinancing your home loan for either an investment or owner-occupier property, is one of the most common options to access your equity or free up additional funds as you grow your property portfolio.
Home loan refinancing means your new lender pays off the existing home loan, and your debt (and payment obligations) is now transferred to the new lender.
How does it work?
If refinancing is the most suitable option for you, once you have found a suitable option and are approved by your new financier the process is pretty streamlined.
You will need to sign some paperwork to change your loan, and if you will likely require a new valuation. We work with your new and old lender to make the switch as seamless as possible.
Once the loan balance is transferred to your new lender, you continue to make your repayments to the new lender with your modified payment terms.
One advantage of home loan refinancing is readjusting the terms and conditions associated with your loan repayments as your lifestyle changes, or simply taking advantage of a better rate. You might be considering refinancing for the flexibility that a different structure could offer, such as an offset account.
The strategy for managing your loan payments now an in the long-term is an important part of any financial decision.
We have put together this list to help you make refinancing decisions.
When should I look at refinancing my home loan?
Timing is a common influencing factor when considering refinancing. Market conditions such as interest rates could be an influencing factor. On the other hand, life milestones such as buying a business, a second residence, or changes to your living situation may prompt you to evaluate your finances and see if refinancing is suited to your changing goals.
You might consider home loan refinancing when:
Three year evaluation period: As you build more equity in your property, you may find that more loan options are available for you. With the current low-interest-rate environment, having your home loans refinanced could help your pay more off your principal or lower the monthly instalments.
Savings of refinancing: As you investigate your new loan options, make sure you understand any costs associated with exiting your loan as you refinance and weigh them against the benefits you will get from a new structure.
What affects my Refinance options?
There are some things we will need to know to help us find suitable options, these factors may affect your loan options so it is best to discuss up front so you can make an informed decision about your finance options.
Your credit score: When you apply for your mortgage, your loan application will typically be subject to a credit check. This means that you need to disclose any past credit issues when you start talking to us about your loan. Even if the problem has been resolved, it may not have been removed from your credit record. So we need to be prepared if there is an issue. If you have a bad credit history, it may affect the types of loans you can apply for. Being prepared will help you ensure you have access to more options for your home loan refinance.
Consider debt consolidation: You may have several loans along with your mortgage repayments, such as personal loans, credit card debts or car repayments. Depending on your equity and available loan packages, you may be able to consolidate these debts into your refinance. In this situation, debt consolidation means the remainder of your other debts are rolled into your home loan. It essentially allows you to pay off the debts at the interest rate of your mortgage, which is typically lower than that of a credit card or car repayment interest rate.
Choosing your loan features: While you may be opting to refinance due to low interest rates, it is an opportunity to consider all available mortgage features to help you attain your future financial goals. Loan features may include redraw ability, offset accounts or splitting your loan. Understand your options and additional features means we can tailor a loan package that suits your lifestyle and goals.
Look the whole picture: The interest rate is of course one of the most important (if not the most important), component of your loan. We have talked about features such as offset accounts and redraw facilities to suit your lifestyle. But another consideration is your repayment strategy.
With the reduced interest rates you may continue paying the same amount of the principal loan off. In this scenario, you are lowering your interest payments meaning you have more cash in your pocket whilst paying your loan in the same time frame.
Another option could be to pay more off of your interest. In this scenario you would continue to pay the same amount every month. However, because you are paying less interest you are paying more off of your principal loan. In the long term, you are shortening the length of your loan and the total amount of interest you pay.
Appraisal of your current property value: The lender will most likely undertake a valuation of your property. This appraisal of your property’s current value will help determine the available equity you have.
Equity is used to determine your loan-to-value ratio. If your loan-to-value ratio is quite high (and sometimes when it’s very low), it can affect your available refinancing options.
Refinance when it is the right time for you!
Refinance when it is the right time for your financial goals and circumstances. Chat to a broker about what your options are and understand the full scope of your
Why use a Mortgage Broker for your home loan refinance?
It can be overwhelming to do the leg work and compare different package options when it comes to home loans.
The benefits of using a Mortgage Broker is that we work for you:
- We are up-to-date finance industry trends: We can help you navigate the lender approval conditions and tailoring mortgage solutions that suit your current needs
- We have access to a diverse panel of mortgage lenders: We have access to hundreds of loan products from a range of mortgage lenders. We can research the market through our panel of lenders to present you with choices for your loan refinancing products.
- Streamlining the application process: Our team has 50-years of combined industry experience. As your local Brisbane mortgage broker, we will guide you through the refinancing process and take the stress out of applying for your loan.
- We are part of your team: You may be refinancing due to planning your retirement, or securing a loan for your business. Everyone is different. We work with your Financial Planner and Accountant as part of your team to understand your goals and financial position to deliver options that suit your needs.
If you are interested in exploring your refinancing options, please contact the team of mortgage brokers in Brisbane at Platinum Package Home Loans for a confidential chat about your options.
Terms are subject to approved persons only. This information is true and correct as of 20/10/2021. All of the content above is general in nature and may not suit your personal needs, situation objective & goals.