Refinancing Guide

Is your home loan still up to date with your needs and wants?

Things change, and chances are since you got your home loan interest rates have moved, and life has too.  New products designed to attract borrowers are always being introduced, and lending appetites are an ever-moving feast.

Let’s not forget that things have probably changed in your life too since you took out the mortgage.  Your income may have changed, and your expenses probably have too – your financial goals could also be different.

Even though most loans are around 30 years in length, you may be surprised to hear that Australians often change their home loan every 4-5 years as they refinance.

Refinancing is a chance to look at what’s out there and to check to see whether your current loan is still the right one for you. If it’s not, it may be time to refinance. Afterall, more than half of all Australians taking out a mortgage are doing so with the help of a mortgage broker.

Why is Getting a Mortgage Broker the Better Option?

• We provide real choice, looking to find you the right deal.
• We work with multiple lenders, not just one – keeping competition alive.
• We may negotiate a better outcome.
• We help at a time and place that suits you, doing the legwork for you.
• Our aim is to save you time and stress and get things moving as quickly as possible.

Why should you refinance?

It’s a good idea to see what’s out there on a regular basis. But you should also bear in mind the long-term costs of increasing your borrowings.

Lower Rates and Fees

Obviously the first question to ask is could you be paying less? A loan with a lower interest rate or less fees can be the simplest way to reduce your repayments. It means you can unlock a little more spending money, or better still, pay off more of your principal to pay the loan back sooner.

More Features

But it’s not all about interest rates. Sometimes the loans with the lowest rates also sacrifice features that are not only handy, but also save you money in the long run. For example:

• Offset account. This is a separate account that lets you use the balance to offset the principal on which your interest is calculated. Simply having your pay packet deposited into this account can take time off your loan.
• Flexible payments. Paying some more money into the loan if you have it is a great way to shorten your loan and save more in the long run.
• This lets you easily access any extra funds you’ve deposited into your loan.
• Flexible rates. Depending on what you think rates are going to do (go up, down, or stay the same), you can choose the type of loan that could save you money when they go down, or protect you if they rise

Refinance to Renovate

If you’ve owned your home for a while and its value has increased, you may be able to use this equity to fund your improvements. A bonus is that if you renovate well, you could potentially also add more value to your property. If the extra funds for the renovation are put into an ‘offset account’ you may be able to avoid paying interest on the renovation funds until you start using them.

Choose Provide Finance as your Mortgage Broker

That’s where using a mortgage broker like us can help. We deal with lenders and evaluate loan rates and features day in and day out, it’s what we do, and what we do well. We understand the current market and can offer a wealth of information and expertise for you to draw on. Not only will we help you find the right loan, but we will also aim to make the whole application and approval process much easier.

The first thing we will do is catch up and chat about your current loan and circumstances and find out what your needs and goals are and how they may have changed since you took out your loan.

We can then give you an accurate idea of your current costs; identify any potential savings from rates, fees, or features; and re-evaluate your borrowing potential. From here we can then help find the loan for you.

As your broker, we will look for a loan that suits you and your circumstances. With access to multiple lenders and an array of different loan products, we stay up-to date with the changes within the market and new products from the lenders as they come online.

Once we’ve identified a loan that works for you, we take care of the application process on your behalf.

Why not go straight to a bank?

With so many lenders, and so many products under each of their brands, it’s so important you make the most of this when it comes to such a critical decision as to who and what you choose when it comes to your home loan.

There are a lot of options out there and, with regularly moving interest rates and new products, it’s an ever-changing market. That’s why a broker makes sense. We do this every day. We know the lenders and their products, and we keep up to date with changes when it comes to lender policies, products, and their different lending appetites. We help choose what’s right for you. Banks enjoy working with brokers, as we do a lot of the banks’ work for them making their jobs much easier and may help speed up the application process and get you the top-notch customer service you deserve. In the simplest terms, having a broker in your corner makes finding the right loan easier and can save you time and, hopefully, money.

Know the costs of refinancing.

You will need to know what other costs are involved in ending one loan and moving to another. Only then can you weigh up the benefits of switching loans. The best way to do this is to speak to your broker, but here are some of the fees and costs that some lenders may charge:

• Discharge fee: A lender may charge you a termination fee
• Break cost: If you have a fixed rate loan you could be charged a break cost
• Application fee: This is often charged on settlement of the loan.
• Valuation fee: A lender can charge this fee to have your property independently valued.
• Early exit fees: May be payable if you’ve had your loan for less than a specified period (e.g. five years).
• Settlement fee: A fee charged once the loan is settled.
• Registration fee: Charged when you switch your mortgage to a new lender. This amount varies from state to state.
• Lender’s Mortgage Insurance (LMI): If your new loan is worth more than 80% of your home’s value, a lender will ask you to pay this to protect them from defaults.

We’re here to help make it easier. If there’s something you don’t understand or need more of an explanation, contact the team at Provide Finance today.