Guide to Refinancing
Refinancing your mortgage
There are a wide range of reasons why you might be considering refinancing because homeowners are a diverse bunch.
What does refinancing mean?
Refinancing is when someone with a home loan decides to change their loan to either a different loan or amount with the same lender or to a new lender who will take over the existing mortgage.
Accessing Equity to Refinance
If you have paid off some of your home loan, you might have something called “home equity.” This means your house is worth more than what you owe on it. You can find out how much equity you have by getting someone to check how much your house is worth. Then, you can use that extra money by refinancing your loan. Refinancing means you get a new loan with better terms, and you can use the extra money for things like fixing up your house or buying a car or a holiday.
Did you know the benefits of refinancing?
Sometimes homeowners choose to refinance their home loan for different reasons. Here are some examples:
To save money
Refinancing might give them a better deal with a lower interest rate, which can save them thousands of dollars over time.
To borrow more money
Some homeowners can increase the amount they borrowed by refinancing their loan.
To change the loan terms
Homeowners may want to change their loan repayments from principal-and-interest to interest-only.
To access package deals or benefits
Bundling all their banking with one financial institution may give homeowners access to special deals.
To add more loan features
Refinancing may give homeowners access to loans with more features, like an offset account or redraw facility.
To consolidate debts
Refinancing could help homeowners combine multiple debts into one home loan. However, this can be risky, so it's a good idea to seek financial advice first.
What does it cost to refinance a home loan?
a charge made by your present lender when you repay your loan.
a cost your new lender levies for your fresh loan application.
Principal and interest and interest-only repayment are the two primary loan repayment options. Variable, fixed, and split rate are the three main interest rate categories for house loans.
a charge made by your new lender to establish the current worth of your property.
Even if you had paid for LMI through your current lender, you can still be required to pay it if you have less than 20% equity in your home.
If you intend to refinance within the fixed rate period and have a house loan with a fixed rate, you will probably have to pay a break fee.
Explore Refinancing
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