Because Refinancing endows you with an array of savings and benefits...
If you're wondering why to go through all that red tape again, have a look at this:
- Are you locked into an interest rate which is higher than the market value?
- Are you on the lookout to invest in a bigger property?
- Are you in need of funds for making renovations to your house or investing in some other asset?
- Are you looking for a way to pay out smaller debts with high interest rates?
If you answered yes to any of these questions, then Refinancing may just be the ideal option for you! Of course, you need to consider several other factors, such as the cost involved, the right time to make the move, and the term of the loan.
Refinancing costs and savings
If you are thinking of refinancing you need to work out if the interest savings over a few years outweigh the costs.
- Fees to close your existing loan
- Setup costs for the new loan
- Government registration fees
- Lenders Mortgage insurance
Mortgage insurance is a major reason why people don't refinance. If your loan is still above 80% of the value of the property, it will be levied again as it is lender specific.
If the costs are too high in comparison to the savings, it may make more sense to stay with your current lender. Click here to find out more about refinancing fees.
When Is The Right Time To Make The Switch?
Experts suggest that it is a good idea to review your home loan after every three years. You may compare the existing loan features and interest rates with those of the loan products available in the market at that point of time. This gives an insight into whether the switch will offer you the desired flexibility and money savings.
Here's a quick overview of the situations when refinancing turns out to be a viable option:
- There is a lower rate of interest on offer
- There has been a change in your financial situation
- There is a better loan product in the market
- You are bogged down with multiple debts from different sources and want to consolidate all of them with your home loan
- Your existing property has accumulated some equity, which you want to utilize for making improvements to the house or for any other financial purpose
- You want to switch to a fixed rate type of loan
When It Is Not The Right Time To Make The Switch?
There may be situations when it may not be a good idea to go for Refinancing. You may avoid the refinance option if:
- You are already repaying your loan for the last 20 years or more. Opting for a longer term loan may reduce the amount of monthly payouts, but it would attract more years of loan and as a result more money
- The cost outweighs the savings. The cost would generally include a fee to close down the existing loan, Government registration fee, lenders mortgage insurance, and other initial costs of the new loan
- There exists an uncertainty of the source of income over the period of the loan
- You have an unfavourable credit history and the chances are low that you'll get a good rate
- Your current loan balance is low and you are not in a dire need of redrawing the accumulated equity
Amidst all these assessments, you also need to consider the tax implications of refinancing. If it's an investment property, then the expenses incurred for setting up the new loan and exiting the older one are eligible for tax deduction. However, it is important that you stringently follow the rules laid by the Australian Taxation Office.
How Can We Help You?
At Refinancetoday, we have a rich lineup of expert and experienced brokers, who are always willing to assist you in your pursuit of getting a better deal for your home loan. We can help you in assessing the situation of the existing home loan, choosing the perfect new loan product, making you understand the features & benefits, and enabling you to have a better insight on the worth of your property. We also aid you in the preparation and submission of the necessary documents and that too with utmost efficiency!