Refinancing is a term we hear more and more these days, but what does it actually mean? Below is refinancing explained
Basically refinancing is where you take out a loan, in order to repay an existing loan. Refinancing allows you to modify your mortgage, to better suit your changing needs.
Many people choose to refinance when their circumstances change – some are fighting back against rising interest rates, others have experienced changes to their employment status or relationships at home. You may refinance your mortgage by switching to a different lender, in order to take advantage of a lower interest rate, therefore reducing your mortgage repayments and saving on interest over the life of the loan.
Many people refinance their mortgage, as a means to borrow additional funds. This is done by using the equity that they have built in their property. Refinancing is commonly used by people wanting to; renovate or landscape their home; buy a new car; go on a holiday or even pay for a wedding.
Refinancing is also a popular way to consolidate all of your debts into one repayment, generally with a lower interest rate. This can include debts such as credit card debt, store card debt and personal loan debt.
Benefits of Refinancing Explained:
- Make improvements to your home i.e. renovate
- Consolidate your debts
- Change to a lower interest rate
- Change from a variable rate to a fixed rate interest rate; this enables you to have control of your monthly repayments
- Change from a fixed to variable rate, this enables you to pay off your home loan faster
- When you refinance you can gain access to cash for major expenses
A large majority of people assume that their application for a loan will be turned down due to having bad credit history. However, many homeowners have succeeded in refinancing their mortgage despite having a bad credit rating. In many cases refinancing your mortgage may improve your bad credit rating as it shows you were successful in obtaining a loan.
At the Australian Lending Centre, we believe every person should have the opportunity to lock in a better deal, including those with past credit issues (such as a bad credit rating). What makes us different is our ability to help people the banks have turned down. If you’re tired of mistakes in your past constantly haunting you when you apply for a loan, then talk to us – we understand circumstances do change. Simply call 1300 138 188 or fill in an enquiry form to your right, and we will contact you shortly.