With a home loan it’s easy to just ‘set and forget’. But it’s sensible to review your home loan every three years or so.
We’re living in a world of rapid change, where interest rates go up and down fast, new lenders emerge and more competitive lending products become available on a regular basis. Under these circumstances, keeping the same home loan for 30 years could cost you more money than you need to spend!
In this article, we provide a step-by-step guide to refinancing your home, breaking it down into simple layman’s terms. But before we get into that, let us clear up a few common questions about refinancing.
WHY SHOULD YOU CONSIDER REFINANCING?
Generally speaking, there are four main reasons to consider refinancing.
- Your loan may be outdated and you could potentially get a lower interest rate.
- Different home loan features could work better for you.
- Your financial situation may have changed.
- You want to access some of the equity you’ve built up in your home.
WHEN SHOULD YOU CONSIDER REFINANCING?
There’s no time like the present! We’re currently experiencing a low interest rate period, so there are many competitive home loan products available. Generally speaking, it’s a good idea to review your home loan every two to four years.
WHO SHOULD YOU CONSIDER REFINANCING?
You should always talk to a mortgage broker because our opinion is not biased towards any particular lender or product. And we won’t suggest that you refinance if it isn’t the right move for you.
HOW DO YOU REFINANCE?
We’ve explained the when, who and what of refinancing, but what’s the actual process involved? Here’s a simple step-by-step guide.
- STEP 1: SPEAK TO US
Before we begin exploring your loan options, it’s important for us to have a sound understanding of where you’re at financially and what you’d like to achieve. Whatever your goals, we’re here to assist!
- STEP 2: CHOOSE YOUR MORTGAGE AND APPLY
We’ll help you find the right mortgage to fit your personal financial circumstances and goals. Then we’ll help you submit your application.
- STEP 3: YOUR NEW LENDER WILL PERFORM A VALUATION
Your new home loan provider will require a valuation on your property as part of the application process. Keep in mind that their valuation might be more conservative than the market value you estimate.
- STEP 4: GET APPROVED
Within a few days of submitting your application, it’s likely our inbox will light up with that delightful email confirming you’ve been approved for your new home loan. Yay!
- STEP 5: YOUR OLD MORTGAGE WILL BE CLOSED
Your new lender will contact your previous provider to co-ordinate your refinancing arrangement. The lender will submit a ‘discharge of mortgage’ form to the Land Titles Office in your state or territory to close your old mortgage account. Upon settlement, your new lender will pay out your existing lender with funds from your new home loan and take ownership of your property title. If you’re refinancing to consolidate other debts, they will be closed too.
- STEP 6: YOU START AFRESH!
Once you have your new home loan in place, you can begin making repayments, satisfied that you have the most suitable mortgage for your needs. If you need any help managing your new home loan, we are always here to lend a hand.
We hope you’ll find this guide to refinancing handy, and we would love to help you decide whether refinancing is the right step for you financially. Whether you are looking to refinance for a better interest rate, to access equity, consolidate debt or for a property investment to build wealth for your future, we can help you to achieve your goals. Please get in touch today!
FINANCE FOCUS | AUGUST 2017
The information provided in this page is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs. You should seek independent advice from your financial adviser before making any decisions.
AUSTRALIAN MORTGAGE AND FINANCIAL ADVISERS (AMAFA)
Phone: 07 3378 2056
Fax: 07 3378 2069