Are you looking to refinance your home loan? With interest rates staying low in Australia, it’s a consideration that many homeowners are taking into account. Vogue Financial Solutions can search over 1500 different loan products from over 30 different lenders to find the most suitable products to save you time and money on your mortgage.
What is Refinancing?
Refinancing your home loan means that you take out a new loan, which replaces your existing one. In some instances, the refinanced loan is with your current mortgage lender, while other times, it’s with a new lender who can provide with you better loan terms and rates.
Either way, the main goal of refinancing usually focuses on obtaining a lower interest rate than you have on your current mortgage loan; obtaining a shorter loan term so that it can be paid off quicker, or both. Another reason why people sometimes choose to refinance is to obtain a different type of loan than they currently have (switching to a fixed rate from a variable or vice versa.)
Is Now the Time to Refinance?
Both variable and fixed refinance rates have been at an all-time low, which has motivated many homeowners to take advantage of refinancing. However, it’s important to remember that not everyone’s financial or home loan situation is the same. It’s always necessary to perform the proper research to make sure that refinancing is the best choice for you. If you’re looking to refinance, here are a few reasons which may point to now being the right time to do so:
- Your current mortgage has a substantially higher interest rate than the current rates you may potentially qualify for if you refinanced.
- Your financial situation has changed and you’re looking to potentially reduce your payments.
- You are looking to refinance into a shorter term so that you can pay off your mortgage sooner.
- You want to switch from a variable interest rate loan to a fixed rate loan or vice versa.
While saving money and/or reducing the term of the loan are two of the most popular reasons to consider refinancing, sometimes homeowners find that they’re unhappy with their lender’s customer service and that alone, may be another reason for homeowners to seek out refinancing.
It’s always important to consider your entire financial situation and your financial goals before making the decision to refinance. Low interest rates alone, while appealing, should not be the only factor taken into consideration if you’re looking to refinance. How long you’re planning to remain in the property, expected future income and any expense that it will take you to get out of your current home loan (if any) should also be factored into your decision to refinance.
Benefits of Refinancing
Obtaining a home loan often takes producing a lot of paperwork, which can take time and energy. If you’ve been looking to refinance, you may be wondering what some of the other benefits and advantages are in addition to potentially saving money.
One of the benefits of refinancing can be switching from a variable rate loan to a fixed rate loan, if that’s an option you’re interested in. Fixed rate home loans have an interest rate that stays the same over the term of the loan. A fixed rate home loan has its advantages and disadvantages, but if you’re looking for your mortgage payment to stay the same for a certain length of time, it can be more beneficial than not. A fixed rate home loan gives homeowners the security of knowing what each payment will be as it will not fluctuate when variable rates go up. The downside is that if the variable rate goes down, you could be missing out on potential savings, so it’s important to take that into account when deciding what type of loan is the best for you.
Another potential benefit of refinancing your home loan can come from consolidating other loans that you have into your mortgage loan. If you have high interest credit cards, personal loans or auto loans, consolidating them into your home loan when you refinance can save you a substantial amount of money due to paying a lower interest rate on the sum of your debt. While consolidation isn’t for every financial situation, if you’re looking for additional ways to save money when you refinance, it’s an option that you may want to enquire about with lenders.
Finally, refinancing may provide you with an option to receive money for the home repairs that you’ve been interested in making or provide you with a way to help pay for educational costs if the value of your home has increased. Many people find that it’s more cost effective to borrow additional money when they refinance due to the lower interest rates. As with consolidation, if you’re interested in obtaining additional money when you refinance, it’s essential to discuss that goal with lenders.
Before Starting the Refinance Process
Before starting the refinance process, it’s important to fully know what your specific goals are. This way, you can start by looking for refinance options that will help you achieve those goals. It may also be helpful to reassess your current home loan to make sure that refinancing is the best option for you.
It’s also very important to start gathering the documents that potential lenders may request, such as documentation of your income and debts. The better prepared that you are before starting the process of your home, the more time you’ll end up saving while you’re going through the refinance process. Put all of the paperwork that pertains to your current mortgage, your income and your debts into a folder to keep everything organised.
The home loan lending industry is very competitive, which is why it’s helpful and time saving to receive multiple rates and information on multiple home loan products at once. Vogue Financial Solutions can help you connect with several lenders and loan products so that you’re quickly able to find the loan and lender that suites your home loan needs.