We hope for better things in life: a better home, a better car, a better career and more. If we do not aspire to change who we are, and what we have, life can stagnate. If you want to improve your position in life, freeing up more discretionary funds, can provide you with greater opportunities.
One way to do this, is to seek a better home loan deal to replace your existing mortgage loan.
If you are still on your original loan, and it has been more than a year or two since you obtained the loan, you may be surprised at how much you can now save if you take steps to refinance your home loan.
Even if you have previously been through a process to refinance your home loan, it may now be time, to again assess whether a better deal may now be available.
Any Melbourne home loan broker can help you approach a new lender to refinance the balance outstanding on your current loan. The objective will be to place you in a better financial position than where you currently sit.
What is Home Loan Refinancing
Refinancing is the process of replacing an existing loan with a new one that offers additional benefits such as a lower interest rate or a more flexible repayment schedule. Australians have the option of switching to a home loan with a lower fixed interest rate, a loan with fewer or lower fees, or a loan with a reduced repayment period for the same level of current repayments.
Whilst individual financial institutions can be approached to refinance a home loan, a Melbourne Home Loan Broker can offer you a far wider range of potential deals, providing the opportunity to compare a wider range of home loan refinancing options, than are available from any one financial institution.
Why Do People Refinance their Home Loans
The following are some of the most common reasons people refinance their home loans;
- To access a lower interest rate
- To lower the cost of home loan fees
- To reduce (or extend) the duration the loan
- To consolidate various debts into a single, manageable payment plan
- To release equity to use for other purposes
- To Increasehousehold cash flow
Factors to Consider when Refinancing a Home Loan
The major factor to consider is whether the benefits you are seeking through refinancing, outweigh the costs associated with exiting your existing mortgage and setting up a new home loan with a new lender.
Your Melbourne Home Loan Broker will help you discover all associated bank fees, legal costs, Government charges, insurance costs, and any other costs that you may be required to meet.
Your broker will also consider the impact of any proposed refinancing on your long-term financial goals and assess any impact a proposed refinancing may have on any other property loans you may be servicing.
How Does Loan Refinancing Work
The usual way to refinance your loan is to have your new lender pay off your debt to your former lender and take up the remaining loan balance as a new mortgage loan.
Once your Melbourne home loan broker assists you to choose the right lender and the right loan product, you can complete the requisite paperwork and other formalities, and the new lender will pay off the old lender and take over the remaining loan balance.
You would then begin making monthly repayments to the new lender under a new mortgage loan.
When to Refinance
You should always be keeping an eye on the health of your finances and take every opportunity to improve your financial position. One of the worst mistake homeowners make is to set and forget their home loan, and settle for 20 to 30 years of repayments with the same lender.
This can be an extremely costly strategy to adopt for the duration of any home loan and can lead to people paying thousands of dollars more than they need to before they own their home outright.
If you have owned your home for more than a few years you should approach a Melbourne Home Loan Broker to review your situation and check the wider loans market to see if there is a better deal available to you.