Our Refinancing Guide
Do you know how well your current loan stacks up?
Since you got your home loan, chances are that interest rates may have moved (and life has too).
Attention homeowners! Has the official cash rate changed since you took out your current loan? Have you checked if your lender has changed their rates and fees? Don't forget that the market is always evolving with new products designed to attract borrowers. And, let's be real, your financial goals and circumstances may have changed too.
Did you know that most Australians change their home loan every 4-5 years through refinancing? It's a chance to assess your options and find the right loan for you.
If you're considering switching, our guide contains everything you need to know. Don't miss out on potential savings - refinance now!
Why should you refinance?
Reviewing your home loan every year or two is a good habit to get into.
As the market and your circumstances change, the home loan that was right for you then, may no longer be one that suits you now. You may be looking to save a bit of money, consolidate your debt or unlock some equity you’ve built up in your home. Whatever your reasons are, it’s a good idea to see what’s out there on a regular basis. But you should also bear in mind the long term costs of increasing your borrowings.
Lower Rates and Fees
Obviously the first question to ask is, could you be paying less? A loan with a lower interest rate or less fees can be the simplest way to reduce your repayments. It means you can unlock a little more spending money, or better still, pay off more of your principal to pay the loan back sooner.
More Features
But it’s not all about interest rates. Sometimes the loans with the lowest rates also sacrifice features that are not only handy, but also save you money in the long run. For example:
Offset account. This is a separate account that lets you use the balance to offset the principal on which your interest is calculated. Simply having your pay packet deposited into this account can take time off your loan.
Flexible payments. Paying some more money into the loan if you have it is a great way to shorten your loan and save more in the long run.
Redraw. This lets you easily access any extra funds you’ve deposited into your loan.
Flexible rates. Depending on what you think rates are going to do (go up, down, or stay the same), you can choose the type of loan that could save you money when they go down, or protect you if they rise.
Refinancing to Renovate
One of the most common reasons to refinance is to renovate.
If you’ve owned your home for a while and its value has increased, you may be able to use this equity to fund your improvements. An added bonus is that if you renovate well, you could potentially add more value to your property. If the extra funds for the renovation are put into an ‘offset account’, you may be able to avoid paying interest on the renovation funds until you start using them.
You could also consider a ‘line of credit loan’ which is essentially like a credit card with a bigger limit and usually much smaller interest rate. These funds are available to draw down on as you undertake your renovations, and you only pay interest on the amount you’ve used.
Talk to us about your options.
When it comes to refinancing, you need to know exactly what is out there in the market to know what your options are.
Looking for a stress-free way to find the right mortgage? Look no further than our mortgage broker services! Our team of experts deal with lenders and evaluate loan rates and features day in and day out, so you don't have to. We'll provide you with a wealth of information and expertise to help you find the right loan that fits your unique needs and goals.
We'll start by getting to know your current loan and circumstances, as well as any changes in your financial situation. Then, we'll provide an accurate breakdown of your current costs and identify any potential savings in rates, fees, or features. With access to multiple lenders and their latest products, we'll find the best loan for you.
And the best part? We'll take care of the application process on your behalf, making the whole process much easier. Don't miss out on potential savings - contact us today to find the right mortgage for you!
Why not go straight to a bank?
Of course you can go to a bank, but this can be more difficult than it sounds.
Firstly, which one do you choose? Which of their products is right for you? And what about other lenders, building societies and credit unions? There are a lot of options out there and, with regularly moving interest rates and new products, it’s an ever-changing market.
That’s why a broker makes sense. We do this everyday. We know the lenders and their products, and we keep up-to-date with changes when it comes to lender policies, products and their different lending appetites. We help choose what’s right for you. Banks enjoy working with brokers, as we do a lot of the work for them and may help speed up the application process. Put simply, having a broker in your corner makes it easier to find the right loan, saves you time and, hopefully, money.
Why using a broker is the smart way to go.
We provide real choice, looking to find you the right deal.
We work with multiple lenders, not just one – keeping competition alive.
We may negotiate a better outcome.
We help at a time and place that suits you, doing the legwork for you.
Our aim is to save you time and stress, and get things moving as quickly as possible.
What’s changed in your life?
As a mortgage broker, we’re very good at letting you know what’s changed in the market.
But when you’re looking at refinancing, it’s just as important for you to walk us through what’s changed in your life, as this can be the deciding factor in what type of loan you refinance into.
Firstly, your income may have changed. Hopefully it’s gone up, but it may have dropped. Your bank balance could have changed significantly thanks to an investment, business interest, or an inheritance.You could have had a change in your relationship status, or you may be planning on starting a family. Your living expenses may have increased, or you may have taken out other loans or credit cards. It’s also very important to know the change in value of your property since you took out your current loan. All of these factors will influence your new borrowing potential.
What mortgage type suits you now?
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The interest rates go up and down depending on the official cash rate, market conditions, and each individual lender’s decisioning. When the rate goes down, so do your minimum repayments. But when the rate goes up, your payments will too.
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The interest rate is fixed for one to five years. Even if rates change, your repayments stay the same. This helps manage your household budget by knowing exactly what you’ll have to pay.
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One part is variable, the other is fixed. This lets you enjoy the benefits of an interest rate drop but also protects you from being affected fully if they rise.
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You only pay the interest on your loan but do not repay the principal loan amount. Your repayments are less but you still have the same level of debt at the end of the interest only period.
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You can pay into and withdraw from this account as long as you keep up with the required repayments. You can have your income paid into this account to help pay off the mortgage sooner, but interest rates are usually higher.
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Usually designed for first homebuyers, lenders will make switching more attractive by offering a lower interest rate for the first six to 12 months, and then the rate returns to the standard variable rate.
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These are popular with self-employed people because they need less documentation or proof of income. However, they usually have a higher rate of interest or need a larger deposit, or both.
Know the costs of refinancing.
One of the main reasons to refinance is to improve your financial position.
So you’ll need to know what other costs are involved in ending one loan and moving to another. Only then can you weigh up the benefits of switching loans. The best way to do this is to speak to your broker, but here are some of the fees and costs that some lenders may charge:
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A lender may charge you a termination fee.
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If you have a fixed rate loan you could be charged a break cost.
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This is often charged on settlement of the loan.
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A lender can charge this fee to have your property independently valued.
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May be payable if you’ve had your loan for less than a specified period (e.g. five years).
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A fee charged once the loan is settled.
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Charged when you switch your mortgage to a new lender. This amount varies from state to state.
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If your new loan is worth more than 80% of your home’s value, a lender will ask you to pay this to protect them from defaults.
The information provided above is for general educational purposes only and does not constitute financial or professional advice, and should not be relied upon as such. We have not taken into account your specific financial circumstances and recommend you speak to an appropriate professional before making any decisions.
