Refinancing Your Home Loan

It’s where you take on a new loan to pay out an existing loan. The new loan could be through the same lender or a different one. Either way, the new lender takes care of paying out your current loan.

By using a mortgage broker, it’s possible that home owners could save thousands over the term of the loan simply by switching to a more suitable home loan.

If refinancing doesn’t put you in a better financial situation then there is no point in going through the process, unless there is another reason to refinance apart from saving money on a better interest rate.

Savings can come from switching to a loan with a lower interest rate or a loan with cheaper fees and fewer charges. When these savings are added to your repayments, you can cut years off your home loan and those cumulative savings can be really worthwhile.

Another way you could save by refinancing is to consolidate your credit cards, personal loans, and car loans with your home loan. Doing this could save you a substantial amount in interest payments, fees and charges.

Beware however if you consolidate short term debt into long term debt you may end up paying more even if the interest rate is lower, its not a case of right or wrong as there may be reason to consolidate debt for cash flow reasons, but we will be able to show you possible outcomes depending on your individual situation.

Assessing those savings is one thing a profession broker can do for you, at no charge.

In some cases Yes, because in most cases non-secured debt carries a higher interest rate than a home loan where the debt is secured to the property.

Saving in interest costs works if you pay the debt over the same terms, i.e., if you were to consolidate a personal loan into your home loan you would save interest if you paid the personal loan portion over the same time frame.

For example, if you have a personal loan which had a remaining term of 5 years and you consolidated this into your home loan and paid this portion over the same period you would save interest, however if you paid the same amount over 30 years you would pay more even if the interest rate was lower.

Talk to us to see what your debt consolidation options are.

Why consider refinancing your home loan in the first place? What are the possible major benefits of refinancing?

• To consolidate other debt such as personal loans or credit cards. Doing this could cut the interest rate you’re paying on those loans.
• To benefit from different features. Some loans provide an offset account or a redraw facility.
• To unlock some of the equity you have in your home to pay for a renovation or a new pool, or to invest in another property.
• To pay off debts such as credit cards by rolling them into your home loan.
• To get a cheaper rate, even if it means giving up a few loan features such as redraw.
• To buy a new car.
• To switch from a variable rate to a fixed rate, perhaps because you want to reduce the risk of higher repayments.

Put simply, a broker will find out what you hope to achieve and then provide you with a short list of suitable loans. They will do all the legwork so the refinancing process is as simple as it can be for you. Over 70% of Australians use a mortgage broker for their home loan needs.

With us, the good news, it won’t cost you a thing!

Our service comes at no cost to you because we get paid a commission by the lender you choose, and we only get paid when you settle your new home loan.

New home lending products are coming onto the market frequently, which is another great reason to talk to a mortgage broker. They will be aware of developments in the home loan market. It’s what we do every day.

Let’s say you want to do some major renovations or add a swimming pool.

One way to finance that is to release some of the equity (the home ownership) that you’ve built up over the years you’ve been making your regular repayments. With those funds, you can pay for the refurbishments or renovations to your existing home.

Many home loans include an offset account and in most cases, these offer a 100% offset to the home loan.

A offset home loan comes with a linked bank account called an offset account. (its really a normal transaction account that is called an offset as its linked to the home loan)

It functions like a normal savings account but with one main difference. Any savings you have in the offset account reduce the amount of interest you pay on your home loan.

Talk to us about refinancing your mortgage to access an improved home loan product that will, in many cases, give you new features such as an offset account or redraw facility.

Redraw facilities let you draw on any additional mortgage repayments you have made. You can access these funds for any purpose you like.

When you earn interest in a saving account, it’s taxable. However, when you put your savings in a home loan offset account, you get a double benefit. You’ll be reducing your home loan interest bill at the same time as not having to pay tax as the savings are not income.

First off, we’ll be very surprised. But to answer your question, nothing. Nothing happens.

You can walk away and owe us nothing.

We only get paid if we provide you with a refinancing proposal and you proceed and take out a new home loan. Again it has to be in your best interest.

In other words, all the risk is on us to provide you with true value, or you don’t proceed and pay nothing.

By refinancing, could you actually finish up being worse off overall? Yes, it’s possible. For example, if one of your current loans has exit costs which could cancel out any benefit derived by consolidating it with your home loan.

Or if you end up paying more overall because of spreading your repayments over a longer period of time.

Also, there are government fees such as Mortgage Discharge and Mortgage Registration Fee to the Land Titles Office or your state equivalent.

As mentioned earlier, we will be able to provide you with a total cost benefit for your consideration.