Refinancing your property is one of the most viable options to access your equity or additional funds as you grow your portfolio. Home loan refinancing is an option as circumstances change. When you refinance, the existing home loan is paid off by taking a new home loan with a modified payment term. The major advantage of home loan refinancing is the better terms and conditions associated with the new loan, for instance, a lower interest rate. In contrast, the older loan is completely shut off. Identifying the three crucial areas of when, who, and how may land you in a position of getting the best tips for refinancing home loans in Brisbane.
When to Consider A Home Loan Refinance?
Timing is a common influencing factor when considering refinancing. Either market conditions such as interest rates could be a factor. On the other hand, milestone decisions such as buying a business or a second residence may prompt you to consider refinancing.
Key times when you might consider home loan refinancing include:
- Refinance your loans early: As you build more equity in your property, you may find that more loan options are available for you. With the current low-interest-rate environment in Brisbane, having your home loans refinanced could help your pay more off your principal or lower the monthly instalments.
- Justifying the cost of refinancing: As you investigate your new loan options, make sure you understand any costs associated with exiting your loan as you refinance and weigh them against the benefits you will get from a new structure. The savings you make over the first 12-months should outweigh any costs incurred.
Who Should I Talk To About Home Loan Refinance?
As your experienced mortgage brokers in Brisbane, we work for you and use our expertise to research options tailored for your personal circumstances.
It can be overwhelming to do the leg work and compare all the different package options when it comes to home loans. That’s where a qualified Mortgage Broker can help you.
- Getting in touch with the industry: Getting the assistance of a mortgage broker will help in understanding some of the lender approval conditions, opting for the best product that suits the current needs, and even get informed about the home loan products that are yet not in the retail market of Brisbane.
- Getting acquainted with mortgage lenders: Mortgage brokers can introduce you to a wide pool of mortgage lenders with an extensive range of loan refinancing products. Some of the additional benefits are getting redraws, a lowered payment, and creating an offset account.
- Easy handling of paper work: With a mortgage broker of Brisbane guiding through the refinancing procedure, one need not worry about the bulk of paper work. Your mortgage broker makes the process smooth and less stressful.
How to Proceed with a Home Loan Refinancing in Brisbane?
Some of the best tips to consider before going for refinancing are:
- Your credit score: When you apply for your mortgage, your loan application will typically be subject to a credit check. This means that you need to disclose any past credit issues when you start talking to us about your loan. Even if the problem has been resolved, it may not have been removed from your credit record. So we need to be prepared if there is an issue. If you have a bad credit history, it may affect the types of loans you can apply for. Being prepared will help you ensure you have access to more options for your Brisbane home loan refinance.
- Consider debt consolidation: You may have several loans along with your mortgage repayments, such as personal loans, credit card debts or car repayments. Depending on your equity and available loan packages, you may be able to consolidate these debts into your refinance. In this situation, debt consolidation means the remainder of your other debts are rolled into your home loan. It essentially allows you to pay off the debts at the interest rate of your mortgage, which is typically lower than that of a credit card or car repayment interest rate. Your Mortage Broker will be able to let you know if this is an option suitable for you.
- Choosing your loan features: While you may be opting for a home loan refinance due to low interest rates, it is an opportunity to consider all available mortgage features to help you attain your future financial goals. Loan features may include redraw ability, offset accounts or splitting your loan.
- Look the whole picture: The interest rate is of course one of the most important (if not the most important), component of your loan. We have talked about features such as offset accounts and redraw facilities to suit your lifestyle. But another consideration is your repayment strategy. With the reduced interest rates you may continue paying the same amount of the principal loan off, but you are lowering your interest payments meaning you have more cash in your pocket whilst paying your loan in the same time frame. Another option could be to pay more off of your interest. In this scenario you would continue to pay the same amount every month. However, because you are paying less interest you are paying more off of your principal loan. Meaning that in the long term you are shortening the length of your loan.
- Appraisal of your current property value: The lender will most likley undertake a valuation of your property. This appraisal of your property’s current value will help determine the available equity you have. Equity is use to determine your loan-to-value ratio. If your loan-to-value ratio is quite high (or very low), it can affect your available refinancing options.
Refinancing when it is the right time for your financial goals and circumstances can be beneficial.