Everything you wanted to know about refinancing but were too afraid to ask!
7/6/2023
It has now been more than a year since the Reserve Bank of Australia (RBA) started its historic run of interest rate increases. During this time, you may have seen many people talking about the benefits of refinancing your mortgage, but been too unsure or confused about where to start.
Refinancing – which refers to moving your home loan from one lender to another – can be an advantageous move for homeowners on the hunt for a better deal. Lenders are fiercely competing for their slice of the refinancing pie in the current market, with mortgage holders in some cases offered up to a $4000 cashback rebate to switch loans.
Why should you refinance?
Before deciding to make a switch, mortgage holders should assess their short and long-term financial goals, the stability of their personal circumstances, and the costs compared to the savings of refinancing a mortgage. And the best way to do this? By speaking to a mortgage broker!
Refinancing your home loan can be a great way to save money and take advantage of new loan features. Here are some benefits of refinancing for home owners:
Are there any downsides to refinancing?
There are some less attractive aspects to refinancing, namely the need to pay exit fees from your current lender – although these are sometimes covered by rebates – and loan establishment fees with the new bank.
Refinancing can also trap mortgage holders into longer loan terms and owners could be hit with additional costs if they need to unexpectedly move too soon after a refinance. Mortgage holders should be crystal clear about the options they want with their refinance loan and why they want them, to avoid incurring additional fees for no good reason.
Are there any alternatives to refinancing?
Absolutely! You can always speak to us about getting a free valuation on your house, and if you have enough equity we can request a pricing check with your current lender. Repricing is a relatively simple process where your interest rate (and/or fees) change, but your bank stays the same.
Repricing also has the advantages of it typically being a fast process, with minimal paperwork and no additional fees. Furthermore, there is very little for you to do – we will handle all negotiations with the lender on your behalf!
Why should you use a mortgage broker to refinance your loan?
Because we are the experts for advice on refinancing, particularly for you to get help exploring your personal requirements and objectives, aligning your home loan with your lifestyle and financial goals, as well as loan structures, interest rates, comparison rates and the costs associated with refinancing. We are also bound by law to act in your best interests – unlike the banks, who are only concerned with serving their shareholders!
Refinancing your home is not cut and dry – and with an array of products available, each with their own versions of interest rates, terms, conditions, establishment fees and application criteria, it can be a minefield for everyday consumers to navigate.
Luckily, The Loan Company’s mortgage brokers specialise in this specific area and provide our services free of charge to our clients. We can give you professional advice to match your needs with a suitable lending solution, as different lenders will have their own requirements that need to be met in order to qualify for their loan products.
We have already saved many of our clients tens of thousands of dollars on interest and can hopefully do the same for you.
Next step – give us a call!
We hope this has helped demystify refinancing for you. Please give us a call if you have any other questions, or would like to discuss arranging a free Home Loan Health Check and how we can assist you with your own refinance!
