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Refinancing Your Mortgage – Where and How to Start

There can be many factors that may lead you to consider refinancing.  

Think of refinancing as the act of replacing – when you refinance, you replace an existing loan with an ideally better loan with lower fees or a lower interest rate.  

Perhaps your lender’s rate is no longer competitive, the value of your property has increased (and you want to access the equity), or a significant change has occurred in your financial or personal circumstance.  

Whatever the prompt to refinance, you won’t lose anything by investigating whether the time is right – and if you do go ahead, you may be able to save money on interest or wipe years off your home loan merely by changing lenders.  

When and why should you refinance? 

One of the main reasons people refinance their mortgage is to lower their interest rate 

It might be because better deals have become available that you may be eligible for. Alternatively, you might have something significant to pay for such as a credit card debt or a house renovation and are trying to find some extra breathing space in your budget.  

If any of these scenarios resonate with you, it’s likely the right time to research whether you should refinance. 

Making the switch to a lender offering a lower rate can decrease your regular mortgage repayments and even shave years off the life of your loan.  

Use this Government calculator to see just how much you can save by switching your mortgage to a better rate. 

The pros and cons to consider  

Refinancing is popular with mortgagees. Aside from the potential savings of time and money, there are other positives to consider by refinancing:

  • You can consolidate your debts

If you have other debts such as a credit card or car loan, refinancing may provide you with the opportunity to consolidate your loans into one major loan – making repayments easier and in some cases lowering the total interest.

  • You can change your loan type

Is your current mortgage a variable loan? If you don’t like how the interest rate fluctuates, refinancing can help you choose a new loan with a fixed rate so that interest rates are locked-in and you know what to expect

  • You can improve your credit score

By taking advantage of cashing out and refinancing your home, you could also use the extra cash to pay off other debts, boosting your credit score.  

 Although refinancing can be a wise money move, you will need to do your research as it can also result in a budget blunder. For example, if you refinance and extend your loan term to lower your repayments, you could be adding additional years to the life of your loan because it will take longer to pay off (and by doing so, you’ll end up paying more in interest). 

You should also investigate how much you’ll be spending on any hidden fees when refinancing. For example, you may have to pay for Lenders Mortgage Insurance (LMI) if your loan is higher than 80percentt of the new valuation. You could also be up for transfer and establishment fees with your new lender and possibly exit fees with your existing lender 

How to refinance  

With the recent shake-ups to how banks evaluate loan and refinance applications following The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, it can be difficult to determine whether your financial circumstance will qualify for refinancing.   

Start by researching what you need to know when choosing a mortgage broker.  

Whether you’re a first home buyer  or need information about refinancing, the specialist team at Inovayt can help you decide whether refinancing is an option you should consider. 

 Inovayt have access to more than 48 lenders and a strong track record, having settled $250m in loans in the last financial year. 

Contact us today to book a no-obligation consultation.  

Refinancing could place you in a better financial position, let us show you.

Find out more

The information contained on this website is general in nature and is no way intended to be legal, financial or investment advice. The information provided is not intended to be taken as, or relied upon as financial advice or providing recommendations in relation to any financial product. You should seek independent financial advice from a licenced financial services advisor to check how this information relates to you and your circumstances. Inovayt Pty Ltd and Inovayt Wealth Pty Ltd does not accept any liability for injury, loss or damage incurred by the use or reliance on the information provided on this website.

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