Refinancing refers to the process of paying off your current loan with a second loan. If the timing is right for you, refinancing can be a very beneficial exercise and may ultimately save you thousands.
When is the best time to refinance your mortgage?
Refinancing your mortgage works best when the interest rates are low. If they aren’t lower than your current rate, then refinancing is probably not worth your while. The idea of refinancing your home loan is for the likelihood that the monthly repayment amount will be reduced noticeably resulting in a considerably lower home loan repayment in the long-term.
How do you measure costs and advantages from refinancing my home loan?
There are advantages and disadvantages to refinancing your home loan. The idea is to understand what you’re in for with your particular situation. For some people, the best method when considering whether to refinance is simple comparison.
Compare all the costs of your current home loan to the new loan over a future period. Since the loan period may vary according to how steadfast your repayments are, just make the best guess as to how long you will have the new home loan. If the total costs are going to be lower with the home loan, then you should refinance.
How much are you able to borrow by refinancing your home loan?
Most lenders will consider the following four aspects when assessing your home loan refinance application.
- Your ability to pay. It is important that you have a regular income.
- Your credit history.
- All other monetary obligations. It is important for a lender to understand your current financial commitments so that they can determine if refinancing is going to be the best option for you.
- The value of your property. This is usually in the case of home equity loans.
The benefits of refinancing are astonishing, provided that the situation is right for a home loan refinance. What makes it stand out is the fact that it can cost you less compared to most loans and refinancing can be very effective to consolidate high interest debts.
If you would like to speak with a consultant to find out if refinancing is the best option for you, please call 1300 138 188 today, alternatively fill out an enquiry form on the right and a consultant will contact you shortly for a free appraisal.