Refinancing

Refinancing your home loan

If you have a good credit history, you should always make sure you are getting the best rate possible for your home loan. Refinancing is a good way to convert a variable loan rate to a fixed loan rate & can save you thousands over the life of your mortgage.

With house prices always on the rise in Sydney, there’s usually a better option out there to suit your mortgage needs. Here’s a quick breakdown on refinancing your home loan & the benefits of doing so…

 

 

What is Refinancing?

 

Refinancing is the process of getting a new mortgage to replace the original. It’s a process that allows the borrower to obtain a better rate & potentially take equity out of your home. By obtaining a new mortgage you can reduce the monthly payments, lower the interest rate, and change mortgage companies. 

 

 

What are the reasons for Refinancing?

 

  • Reduce your Interest Rates
  • Saves thousands of dollars the life of your mortgage
  • Obtain cash for bigger purchases
  • Take equity out of your home
  • Increase the value of your home
  • Balance owed on the original mortgage is subtracted in the new mortgage

 

The Risks of Refinancing

 

  • Break costs with existing lender
  • Possibly pay lender’s mortgage insurance if the loan is more than 80% of the value of the property
  • New lender’s ongoing fees
  • May take longer time to repay the loan

 

 

When can you refinance your home loan?

 

With the abolishment of major break costs, switching lenders has never been more affordable.  Some banks even pay rebates that cover the costs of switching.  And with interest rates at historical lowest, now is the time to refinance your home loan to a more suited lender.  

 

An independent mortgage broker can help you seek the best loan in the market and calculate the annual savings on your new loan.  They can also help you calculate the equity in your existing home and give you lending options for purchasing investment properties.  

 

Why should you consider refinancing?

 

There are several reasons for refinancing your mortgage, these include:

  • Interest savings– A difference of 0.3% interest rate on a $600k loan could save you about $54,000 over 30 years in interest.  
  • Lower monthly repayments – With the change in interest rate and the term of the loan, your monthly repayments may also go down leaving you with extra cash in your back pocket.
  • Value added products: On top of a lower interest rate, the new lender may offer cash rebates, frequent flyer points, special interest rates, packages with discounted insurance amongst other promotions.
  • Debt consolidation:  Refinancing can also help consolidate all outstanding credit cards, personal and car loans into one home loan with a low interest rate and one repayment.  
  • Get cash out:  If you bought your home a few years back, then chances are its value would have gone up quite a lot.  Your mortgage broker can assist you get cash out along with refinancing using this equity (Home value – Outstanding loan) in your home.  

 

Our mortgage advisors at Euphoria Loans specialise in interest saving and debt is consolidating options for you.  Call us now for an obligation free home loan review on 02 8321 8895

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