Save thousands of dollars and unlock equity
We’ll help you save thousands of dollars and unlock equity
With interest rates at historic lows, now is the perfect time to shop around & ensure you are getting the best deal possible on your home loan. Furthermore, with the values of property having surged in many areas, now is also the perfect time to look at using built-up equity in your property. This can be achieved by looking at options with other, more favourable lenders, and in some cases we can even achieve a rate reduction with your current lender.
We’ll help you with either unlock equity, save on repayments, or both by refinancing your current loan.
What is refinancing?
Refinancing refers to when you take on a new loan and use it to pay off your old loan. This effectively allows you to change your loan to suit new circumstances, or take advantage of better rates that weren’t available when the original loan was being taken out. This can be done by restructuring your loan payments to a better deal, over a longer or shorter period or with different interest rates.
How does refinancing it work?
If you’re staying with the same lender, and provided the specific terms and conditions of your loan permits it, your loan could be restructured to be paid over a longer or shorter time, or with a different monthly interest rate or reduced fees.
If you’re refinancing with a different lender, your new lender will take over your debt and provide you with a new and more advantageous debt plan.
Why do people refinance?
People generally refinance for a number of reasons:
- Newer and better deals frequently appear on the market which are more advantageous or less costly, allowing you to save more.
- You may want to consolidate debt from your credit cards or other loans to lower overall interest rates and simplify your repayments. For more information, see our Debt Consolidation page.
- Your financial situation may have changed and the current plan you’re on may not be suitable for your monthly budget.
- You may be able to access loan features better tailored to your current needs. For example, you may wish to borrow some extra money for renovations or to put towards an investment property. You may wish to refinance your existing debt at a higher LVR, to take both advantage of a better interest rate and give you access to funds for other needs.
What to look out for?
While refinancing can often be very handy, it may have potential costs you should look out for before you commit to any plan of action. Things to look out for may include:
- Application & Registration Fees – these may not be disclosed upfront, but may add to the overall cost.
- Valuation fees – Charged for the valuation of a property.
- Mortgage insurance.
- Early payment, discharge or settlement fees – as the name suggests, payments that you might be liable to make to your existing lender to terminate your loan, even if the loan itself is being paid off. These may or may not exist, and it is advisable to check your existing liabilities or speak to one of our mortgage brokers to go over the files with you.
- Attractive honeymoon rates which revert to a higher ongoing rate, thus costing you more over the long run.
These costs will not apply in every case, but need to be evaluated on a case by case basis. While a prudent refinancing can save money, you might also end up paying more money or interest overall should you extend your current loan period. Early payment or settlement fees usually apply if you’re exiting a fixed rate loan. Speak to one of our brokers to learn more about the costs and potential benefits of switching from your current plan.
How do I choose a plan that’s right for me?
In the same way that you chose your original plan, it’s best to consider your options and your circumstances and look around at the different options and deals available. Speak to one of our brokers so that we can help you find the right lender and deal for your situation and preferences. With our access to over fifty lenders, and experience in a wide variety of circumstances, we will be able to identify the most prudent course of action and negotiate on your behalf.
Contact us today to discuss your finance needs.
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