Refinance Your Home
It has become a common practice these days to refinance your home when your situation changes and when you can see a financial advantage in doing so.
But what does refinance your home actually mean?
Refinancing your home simply means taking out a new home loan that pays out your old loan in full and returns you some benefit from doing so.
Many home loan industry watchers are claiming that right now is the right time to refinance your home as the property market is now easing and some lenders are offering lower interest rates to attract home buyers.
This is good news especially if you feel the home loan you presently have does not offer you all the features that some of the newer loans now have built into them.
Before racing off and taking up the first refinancing offer that you run across it will pay you to fully assess what you presently have.
Why should I refinance my mortgage?
You can have an expert check your present home loan out for you but if you go over the document thoroughly yourself and compare what you have with what is available from other lenders today you will get a fair indication if now is the right time to refinance your home or not.
Look for such things as:
- Can I improve my monthly repayments?
- Are there any hidden costs in my repayments that serve no real purpose?
- Am I subjected to any penalty if I make an additional payment off my home loan?
Home Ownership Goals
When considering home refinancing, taking into account your home ownership goals and needs is a very important factor.
Is the home you are considering refinancing for a permanent or vacation home? If it is a permanent home, chances are you are likely to stay there for quite a while. Owning that home may not be necessary. However, if you are nearing retirement, owning your permanent home can be much less burdensome than having to make monthly mortgage payments on a fixed income.
If this is a vacation home, what would be your specific advantages and disadvantages to owning the home? Is the market in the area on the rise or sinking? If you were to sell this vacation home in the near future, would refinancing benefit or hurt you?
Refinancing can have varied effects on the goals of your home ownership plans- when considering refinancing, also keep in mind your goals for home ownership. If you own or plan to own multiple homes, also consider this specifically.
When purchasing homes as an investment, refinancing takes on a whole new suit. When refinancing an investment home there are potential gains and losses to consider as well. Owning a home in a rising market can be a great boon whereas owning a home in a sinking market can be a grave loss.
Refinancing Reasons
Of course, home ownership goals are important, but the most common reason for refinancing a home is the added cost savings it can offer. This is not always the case over the long run but in the immediate term, refinancing can save you money by taking advantage of low interest rates of the time.
Refinancing a home has many reasons associated with it- one of the most common is debt consolidation. By refinancing a home and paying off many other debts, one can limit their debt portfolio to just the mortgage of the home they live in. This can minimize excess expense and also simplify expense reporting.
Taking advantage of a fixed rate loan can also be a huge cost savings. Though variable rates can sink lower than a fixed rate depending on the current market, they too can also swing much higher than a fixed rate loan. Typically, a variable rate will cost more money in the end than a predictable fixed rate loan. Added on top of that is the predictability and stability of a fixed rate loan, one can see the value a fixed rate loan can offer a homeowner.
By going through your home loan critically asking such questions you will find out whether your existing loan has any features you no longer need but are still paying for.
Should I bother refinancing?
Even a small reduction to your monthly interest repayments can mean the saving of a lot of money over the long term particularly if your lender is willing to waive the charging of any start up fees to get you into the new mortgage.
Remember that when looking to refinance your home it is important to fully examine the new loan on offer for hidden fees as some discounted home loans have other locked in features that you may not need but will add to the final cost.
The costs involved to refinance your home.
One of the main costs will be the requirement of your present lender to have you pay an exit fee to get you out of your existing agreement along with any application fee that may be charged for the taking up of your new loan. Other costs will be government stamp duty, conveyancing, solicitors fees and insurance etc.
The process involved to refinance your home.
- Your solicitor will notify your present lender that your mortgage is to be discharged
- As soon as your present lender learns of the date that settlement is to take place you will be given your final payout amount.
- Your new lender will then arrange to pay the old loan out in full and have the necessary title deeds transferred.
- Upon settlement your new lender will receive the Discharge of Mortgage document which will then be lodged by them with the Lands titles Office.
That’s all there is too it. You are now the owner of a new and improved mortgage that will better reflect your needs into the future.
Many home loan industry watchers are claiming that right now is the right time to refinance your home as the property market eases and some lenders are offering lower interest rates to attract home buyers. If you want to learn more about how to go about the refinance of your home please contact us.
Related posts:
- Home Loan Refinance Rates
- When to refinance Your mortgage
- Refinance Deals
- Mortgage Refinance
- Best Refinance
- How to Refinance
- Refinance your Home Loan or Switch to Bankwest
- House Mortgage Refinance
- Best Refinance Company
- No Closing Cost Refinance
Top Home Loans
| Home Loan | Details | Interest Rate (p.a.) | Comp Rate^ (p.a.) | App Fee / Ongoing Fee | Max LVR | Min & Max Borrowing | |
|---|---|---|---|---|---|---|---|
 Loans.com.au - Dream Catcher | A home loan offer with a $0 application fee and one of the lowest available home loan interest rates. | 6.13% | 6.47% | $0 / $375 | 80% | $50,000 / $750,000 |
 
|
 UBank UHomeLoan (Variable Rate) | One of the market leading variable interest rates. The maximum loan amount needs to be 80% of the property value. | 6.14% | 6.14% | $0 / $0 | 80% | $100,000 / $1,000,000 |
|
 State Custodians Mortgage Company Standard Variable Offset Loan | Awarded the 2011 Non bank Lender of the Year this feature-packed loan rewards customers with a bonus rate drop of 0.20% after 5 years. | 6.22% | 6.45% | $0 / $345 | 95% | $150,000 / $2,500,000 |
|
Ask A Question