Easy Refinancing For a Better Deal on your Mortgage
Whilst refinancing your home loan can seem confusing initially, it's less convoluted than you might think. With record-breaking low interest rates coupled with increased competition throughout the home loan sector, lenders are eager to get your business. When you first obtained a home loan, you most likely paid very close attention to interest rates. Refinancing your mortgage may therefore be a reasonably easy way to save thousands of dollars and get you a better deal on your mortgage.
What is refinancing?
Refinancing, in a nutshell, is basically moving from your current home loan to a new home loan. The most typical reasons why individuals wish to refinance their home loans is to get better interest rates, obtain access to more or improved loan features, or to merge a variety of debts into one mortgage.
When you refinance, you can stick with your current lender - which can minimise inconvenience if you do all your banking with the same lender - or shift to a new one.
Make the call
A good place to start is by getting in touch with a mortgage broker. A broker can examine hundreds of loan options across both bank and non-bank lenders to look for a loan that matches your individual requirements - saving you a great deal of time and money.
Evaluate your options
Once you understand where you stand with your current lender, it's important to do some research. You'll want to see if you can get a better rate - or preferable loan conditions - at another lender. Always remember, it's not only the 'big four' banks; there are lots of smaller banks and non-bank lenders on the market.
Your broker can assist you to recognise the best loans for your circumstances, negotiate with lenders on your behalf, and explain home loans that have features that could be valuable to you.
If you wish to have more flexibility in your home loan, for example, they might advise switching to a mortgage that allows you to make unlimited additional repayments, or a loan that has a redraw facility and an offset account. In contrast, you might prefer to stick with your current loan but access your equity for an investment property for example.
After you've decided what you want from a new mortgage, your broker will evaluate your financial situation to determine the amount you can borrow.
Submit your application
Your mortgage broker typically organises all the paperwork and takes care of lodgement. Ensure the terms of the loan have been explained to you, and ask questions if anything is ambiguous. You should have a thorough understanding of:
○ the length of the new loan
○ features of the new loan, such as a redraw facility or offset account
○ the interest rate of the new loan
○ how much your repayments will be on the new loan
○ all fees and charges associated with refinancing, including exit fees, start-up fees, new loan establishment fees and settlement fees
○ any applicable government charges.
Once your application is approved, you will receive a letter of offer and in conjunction with your contract for the new loan. After signing the contract, you will reach settlement. Your new mortgage is then drawn down, which means the funds from your new loan are used to pay off your existing home loan.
The Discharge of Mortgage document will be registered with the Land Titles Office for you. Your new lender will lodge a Discharge of Mortgage document with the Land Titles Office. After this has been done, you can start making repayments on your new loan. Don't let the approval process intimidate you - it may seem complicated, but if you're using a mortgage broker it essentially happens in the background.
It's a smart idea to review the home loan market at least annually to make sure your home loan is still the best with regards to your specific requirements. When you do this, consider meeting with a mortgage broker so you make an informed decision about your options.
For all of your mortgage and mortgage broker needs, contact one of the friendly team members today at Go Mortgage. We have a range of lenders to choose from to identify the right loan for your needs. Contact Go Mortgage today on 1300 855 244 or visit http://www.gomc.com.au.