Refinancing your home loan can be a great way to take advantage of a lower interest rate and save money. Before you make the switch, however, it's important to make sure that the benefits outweigh the costs. You may be charged a “rest” fee if you don't comply with your contract. To get started, you'll need to have a clear understanding of your financial situation and compare home loans. Refinancing is the process of paying off your current home loan by obtaining a new loan, either with your current lender or through a different lender.
With the lowest rates on the market, now is a good time to evaluate your home loan and make sure it's the right one for you. You can refinance with your current lender by requesting a change to another type of loan. You can also refinance with another lender (or through a mortgage broker), which means going through that lender's application process. If your application is accepted, the new lender will normally arrange for the old lender's mortgage to be “canceled” and transferred. There may be fees and charges related to refinancing, including cancellation fees.
Once you refinance to a more suitable mortgage product, you should make sure to re-evaluate the status of your home loan every few years to make it work hard for you. Refinancing is also an attractive option if you plan to use your home equity to make other purchases, such as buying a car, investing in your child's education, or renovating your home. If you want to get a better interest rate or enjoy more lending features, refinancing your home loan may be the solution. Yes, you can be denied refinancing if your financial circumstances have changed since you previously applied for a home loan. Some borrowers prefer the certainty of a fixed mortgage loan, which refers to a static interest rate over a fixed-term period. If you're not sure what type of loan you have, it should be on your home loan statement, or you can log in to your lender's online banking to view your account information. Home equity is the difference between the market value of your home and what's left to pay on your home loan.
Many borrowers choose to refinance to take advantage of benefits such as lower interest rates, additional features and flexibility, to access housing capital, or to meet debt consolidation requirements. When it comes to refinancing, you won't need a traditional deposit, but what you'll need is the equity in your current home - that is, the part of your home that you “own” based on the amount you've earned in repayments on the principal of the mortgage loan. The overall costs of refinancing will depend on your current lender, your new lender, and potentially the state or territory in which you live. In fact, once you've found a home loan that appeals to you, it can be as simple as meeting with the lender, providing them with some documents, and making a decision. Fixed-rate loans usually return to a variable rate at the end of the term, so it might be worth comparing your options. Refinancing your home loan can be an excellent way to save money and take advantage of lower interest rates. Before making any changes, however, it's important to make sure that the benefits outweigh any costs associated with switching lenders or products.
To get started, evaluate your financial situation and compare different home loans.