Mortgage Loans
Refinancing Your Home Loan
Refinancing Mortgage Loans
Is Refinancing Your Home Loan The Right Move?
It’s one of the more difficult home loan questions – should you refinance?
Refinancing a mortgage, in essence, is the transaction that occurs when an existing loan is paid down and is replaced with a new one. There are many common reasons why homeowners refinance, such as:
- To obtain a lower interest rate and pay off your home loan sooner
- Dissatisfaction with the current lender
- Intent to convert from a variable to a fixed rate (or vice versa)
- An opportunity to access current home equity to finance other purchases
- Consider equity release for investing in property or personal needs; and/or,
- The desire to consolidate your debt.
The only time to consider refinancing is when you’re certain that it is in your best interests. Everyone is different, and therefore people’s reasons for refinancing differ greatly.
How we can help you?
We Have Over 40 Lenders Which Can Offer You The Best Refinance Home Loan Deal
Some of The Features And Options We Review
To Find The Best Home Loan For You
Offset accounts
An offset account is connected to your home loan and is used to reduce the interest on your home loan account. With your offset account, you can deposit your salary and savings, so the balance offsets against the amount owing on your home loan. For example, say you have a home loan of $500,000 and $50,000 in your offset account. The home loan will charge interest on $450,000, even though your principal is $500,000.
An offset account is incredibly convenient for those with a home loan from the same financial institution they bank with and who are paid monthly.
Additional repayments
The additional repayments feature allows you to dedicate any extra cash to lower your principal. Lowering the principal, in turn, reduces the amount of interest paid. In addition, most lenders have a redraw facility that allows you to withdraw any extra repayments made if the need arises. Whether you think you will have access to additional income or not, the capacity to make and have access to additional repayments is a feature worth considering in any home loan.
Loan portability
A Portable loan means transferring an existing loan to another property without refinancing. For example, if you sell house X and buy house Y, you can transfer a portable loan from one to the other without losing time and money on application and legal fees. Note that portability is only available when you use the same lender to finance both.
Redraw facility
As mentioned under additional repayments, the redraw facility gives you access to any ‘additional’ funds available, i.e., from the extra repayments made, without any explanation to the lender. Note that some lenders charge a fee for every redraw and or set a minimum redraw amount.
Repayment holiday
Home loan repayment holidays offered by some lenders allow you to take a break from your mortgage repayments for a period of time. Different lenders offer different periods, terms, and conditions. A repayment holiday may reduce the pressure on borrowers whose finances are stretched through difficult circumstances such as unemployment or maternity.
Direct salary crediting
Salary credit enables you to pay your salary directly into your home loan account, reducing the principal owed. In addition, as interest is calculated daily, the salary credit feature reduces the amount of interest paid. This feature is handy for salaried couples or any home loan with multiple contributors. It is also a convenient way to make loan repayments.
Switching feature
The switching feature allows you to switch from a variable to a fixed interest rate. This feature is worth considering if the economy and interest rates are unstable.
Professional packages
Professional packages are loan 'bundles' offering borrowers discounts on interest rates, ongoing fees, and reduced application and establishment fees, subject to loan size.
Interest only loans
Interest-only loans are short-term loans ranging from one to five years and are often used by investors. On these loans, only the interest portion of the loan is repaid with the principal remaining unchanged during the ‘interest only’ term.
Top up
A loan top-up allows the borrower to increase the limit on their existing loan without acquiring additional finance through other sources.
Construction loans
Certain home loan features may not be available during your property's construction phase. For instance, the redraw facility may be withdrawn, and your repayment frequency may change. However, all the loan features will be enabled after your property is built.
Limited guarantor loans
A limited guarantor loan or an equity guarantee loan allows family members to assist you with your loan by guaranteeing a part of your loan. Family members ‘pledge’ to aid the borrower and act as a guarantor for your loan, providing extra security or assisting with repayments.
Comparison rate
Comparison rates is an interest rate that always accompanies a lender’s advertised interest rate. This is because the comparison rate represents a home loan’s actual cost, which is the ongoing cost of the loan after its regular fees and charges (annual or monthly maintenance fees, package fees, etc.) have been considered.