Considering Refinancing Your Home Loan? Here’s What You Need to Know
The other crucial decision that most Australians take while dealing with their homes involves refinancing. Are you looking to lower your regular repayments, combine loans, or unlock equity? Probably, refinancing is here to help you cut costs and meet all the dreams you have. Nevertheless, getting a new loan is a very complicated task, and before going about getting a new loan, all those pros and cons have to be weighed into consideration.
What is Refinancing?
Refinancing is actually the process of replacing your home loan with a new one maybe with a different lender, or a different type of loan. The primary intent is usually to gain better interest rates and lower your monthly payments, or the change in loan structure is more suitable for your current situation.
There are plenty of reasons to refinance. Your personal situation might have changed or you might be desiring to take advantage of the low interest rates that the current market is offering. Be it for any reason, refinancing can improve your financial status but should be weighed on both sides on the basis of cost and benefit.
Why Refinance?
Reduce Interest Rate
The most popular reason Australians refinance is a lower interest rate. You locked into a home loan when the interest rate was higher or market interest rates have fallen since you took your mortgage, and refinancing may be able to get you a better rate. A lower rate can save you thousands of dollars in interest paid over the life of the loan as well as result in significantly reduced monthly repayments.
Modify Loan Features
Now comes the part where you get to alter your loan features to best suit your financial goals. Do you perhaps need a change from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage or vice versa if you expect interest rates to decline? You may just choose to increase your loan term to make monthly payments less of a stretch, or you may shorten it and pay off the loan quickly.
Access Home Equity
If your property has increased in value after you obtained the loan that you now carry, by refinancing you may even be able to tap into this equity. A cash-out refinance lets you borrow more money than your existing mortgage, and take the difference at closing. This extra can be used to pay for new home improvements, consolidate loans, or fund other money needs. However one has to be careful while accessing equity because this increases one’s debt load.
Consolidation of Debt
Many Australians also use refinancing for putting high-interest debts, credit cards or personal loans within the mortgage. It then can ease your life considerably as you will not face more than one loan account. Generally, the rate of interest of a home loan is lesser than a credit card with which you can save your funds in the long term for a certain period of time and pay more interest throughout life.
How to Know If Refinancing Is Right for You
It is not always the case that refinancing is the right thing for everyone, so it is essential to work out the numbers before one makes a decision. Here are some key questions to ask yourself:
How much might I save? Calculate how much your current monthly repayments are compared to the new repayments under a refinanced loan. Do not forget to factor in any fees associated with refinancing.
How long will I stay at home? If you plan to move within the next few years, refinancing may not be worth the upfront costs unless the savings are significant.
Is my credit score in good shape? A higher credit score can help you qualify for a better interest rate. If your credit has improved since you took out your current mortgage, refinancing could help you secure a better deal.
Final Thoughts
Refinancing is also a good option in cases when you can save quite some money by lowering interest rates, cutting monthly repayment fees, and thus ultimately being able to realise more your financial goals. On the other hand, it does cost, and it’s quite dangerous, so it is well essential to assess fully that the refinancing option best serves you. To aid the process, seek help from the mortgage broker or any form of financial advisor regarding better options, which may even further ensure that this type of refinancing will work favourably for you in the long run.
If you ever feel that refinancing will be a good option, then probably now is when you should consider it. Although interest rates are still reasonably low and many loan products are available, refinancing might help you regain control of your financial future.
NRG Financials takes away the pain from your home loan process so that you can get your loan faster, easier, and safer. For inquiries,
@NRGfinancial takes away the pain from your home loan process so that the #mortgage process is easier for you and you can get to your new home faster. We take a look at your financial history and we suggest a plan that works best for you. There is a home for everyone. Cheers
Considering Refinancing Your Home Loan? Here’s What You Need to Know
The other crucial decision that most Australians take while dealing with their homes involves refinancing. Are you looking to lower your regular repayments, combine loans, or unlock equity? Probably, refinancing is here to help you cut costs and meet all the dreams you have. Nevertheless, getting a new loan is a very complicated task, and before going about getting a new loan, all those pros and cons have to be weighed into consideration.
What is Refinancing?
Refinancing is actually the process of replacing your home loan with a new one maybe with a different lender, or a different type of loan. The primary intent is usually to gain better interest rates and lower your monthly payments, or the change in loan structure is more suitable for your current situation.
There are plenty of reasons to refinance. Your personal situation might have changed or you might be desiring to take advantage of the low interest rates that the current market is offering. Be it for any reason, refinancing can improve your financial status but should be weighed on both sides on the basis of cost and benefit.
Why Refinance?
The most popular reason Australians refinance is a lower interest rate. You locked into a home loan when the interest rate was higher or market interest rates have fallen since you took your mortgage, and refinancing may be able to get you a better rate. A lower rate can save you thousands of dollars in interest paid over the life of the loan as well as result in significantly reduced monthly repayments.
Now comes the part where you get to alter your loan features to best suit your financial goals. Do you perhaps need a change from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage or vice versa if you expect interest rates to decline? You may just choose to increase your loan term to make monthly payments less of a stretch, or you may shorten it and pay off the loan quickly.
If your property has increased in value after you obtained the loan that you now carry, by refinancing you may even be able to tap into this equity. A cash-out refinance lets you borrow more money than your existing mortgage, and take the difference at closing. This extra can be used to pay for new home improvements, consolidate loans, or fund other money needs. However one has to be careful while accessing equity because this increases one’s debt load.
Many Australians also use refinancing for putting high-interest debts, credit cards or personal loans within the mortgage. It then can ease your life considerably as you will not face more than one loan account. Generally, the rate of interest of a home loan is lesser than a credit card with which you can save your funds in the long term for a certain period of time and pay more interest throughout life.
How to Know If Refinancing Is Right for You
It is not always the case that refinancing is the right thing for everyone, so it is essential to work out the numbers before one makes a decision. Here are some key questions to ask yourself:
How much might I save? Calculate how much your current monthly repayments are compared to the new repayments under a refinanced loan. Do not forget to factor in any fees associated with refinancing.
How long will I stay at home? If you plan to move within the next few years, refinancing may not be worth the upfront costs unless the savings are significant.
Is my credit score in good shape? A higher credit score can help you qualify for a better interest rate. If your credit has improved since you took out your current mortgage, refinancing could help you secure a better deal.
Final Thoughts
Refinancing is also a good option in cases when you can save quite some money by lowering interest rates, cutting monthly repayment fees, and thus ultimately being able to realise more your financial goals. On the other hand, it does cost, and it’s quite dangerous, so it is well essential to assess fully that the refinancing option best serves you. To aid the process, seek help from the mortgage broker or any form of financial advisor regarding better options, which may even further ensure that this type of refinancing will work favourably for you in the long run.
If you ever feel that refinancing will be a good option, then probably now is when you should consider it. Although interest rates are still reasonably low and many loan products are available, refinancing might help you regain control of your financial future.
NRG Financials takes away the pain from your home loan process so that you can get your loan faster, easier, and safer. For inquiries,
Send a mail: admin@nrgservices.net.au Or
𝗖𝗮𝗹𝗹 Now: +0417263912
#homeloans#refinance#mortgagebroker#finance
@NRGfinancial takes away the pain from your home loan process so that the #mortgage process is easier for you and you can get to your new home faster. We take a look at your financial history and we suggest a plan that works best for you. There is a home for everyone. Cheers