Refinance Your Home Loan or Get a Better Rate?

Gino FarinaRefinancing

Refinancing a home loan can potentially save you a lot of money. However, refinancing, or moving your mortgage to another lender, is not always the best option. Sometimes there are many hidden costs to switching, and improving the rate through your current lender can save you both time and money.

How Can a Finance Specialist Help You Save Money on Your Loan?

Before you look at refinancing, it is worth determining if your existing lender may be able to improve your current rate. Finance specialists can guide you through the home loan review process, potentially achieving a better rate through your current lender at no charge to you. They have access to “lender portals” to negotiate lower rates, with the lender well aware that if they don’t provide a competitive offer, the Finance Specialist will take the business elsewhere.
If the lender is not in a position to offer a more competitive rate than the current one, then the finance specialist will start the process of providing a list of refinance options, with the goal to:
● Review your current loan
● Reduce your interest rate
● Reduce your fees
● Revive your savings

Why Choose to Refinance Your Home Loan?

There are many reasons you might want to look at refinancing your home loan:
● Better terms such as lower repayments or a better interest rate
● A change in your financial situation such as a job change
● Borrow money for a renovation or property investment
● Consolidate debts such as personal loans or multiple credit card debts

As refinancing now makes up a big chunk of the mortgage market, there are many competitive refinancing options available for borrowers. However, refinancing has its hazards and needs to be considered carefully before moving forward.

Important Points to Consider When Refinancing

If you are seriously considering refinancing, consider the points below:
Don’t just chase a lower interest rate. You need to think about the entire lifespan of the home loan, not just the interest rate. A home loan product with more features may cost you a bit more in fees or interest, but could save you more in the long run.
Examine the real cost of switching. There are often many costs involved with switching to another lender, such as entry, exit, application, valuation, and stamp duty fees, mortgage insurance, as well as other ongoing charges. While these cannot be avoided, you have to ensure that the costs involved are not higher than the savings, to make the process worthwhile.
Look at your income security. You need to consider how secure your job is, or if you can manage the home loan on one wage instead of two. Lenders will look at how reliable your income will be over the life of the loan, particularly if you are freelancing.
Are you moving house soon? Moving house shortly after refinancing could mean you might not be able to take advantage of the cost savings.
How it will affect your taxes. Consider the impact on your taxes, especially if you have an investment property.
Present the best financial picture of yourself. Before approaching another lender to refinance your loan, make sure you’ve paid off as much of your debts as possible and drop unnecessary credit cards. If you’re late in paying bills and owe considerable amounts on credit cards, you might not be able to find a lender who is going to offer very good rates.

I’ve Decided to Refinance – What Now?

Once you’ve made the decision to refinance, you’ll need to go through the loan application process. This can take some time, especially as it will often require having your property valued. If you’re approved, you may have to wait a few weeks for your loan to be switched over, and the time will vary considerably by lender.
Remember that whether or not refinancing suits you, will come down to your own financial goals and personal circumstance. If you’d like to know more, speak to your finance specialist.

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