If you have changed your situation since taking out your home loan, it may be time to refinance your mortgage. This involves switching your mortgage to a new bank and could help improve your financial position by lowering your interest rates, changing your repayment terms, adding benefits to your loan, or a combination of these. If you want to learn more about this, then we’ve got just the thing for you. Here’s everything that you need to know about refinancing home loans.
What Are the Benefits of Refinancing Your Mortgage?
Now, you may be wondering why anyone would want to refinance their mortgage. And while it is true that it isn’t necessary for every situation, there are times wherein refinancing is simply the best move. It’s worth being thorough when it comes to gauging the need for refinancing, as you wouldn’t want to have to go through the process if it’s not right for your specific situation. To give you a better idea of whether it’s right for you, here are a few notable benefits of home loan refinancing:
- Reduce your repayments
- Consolidate several loans
- Get a lower interest rate
- Borrow more for renovations or investments
Refinancing your home loan can be a smart move. But refinancing isn’t for everyone — it typically means extending the time you have to pay off your loan, and that will increase the amount of interest you pay over time. If you want to get a better idea of what refinancing can do for you, compare the available loans and consider your needs.
How Much Can You Borrow?
Lenders generally will only lend up to 80 per cent of the value of your home. This is known as the loan-to-value ratio. To determine this, add up all your secured loans and divide by the current property value. Then multiply the result by 100.
How Do You Choose a Lender for Your Mortgage Refinance?
Comparing home loans can be quite tricky. Before you commit to refinancing, it’s crucial that you reach out to your current lender and inform them of what you plan to do. This gives mortgage brokers the opportunity to offer you a better interest rate or loan arrangement that’s more to your liking than what you could get from your current bank. If you’re sure you’re ready to leave, do some research on other banks. Compare all the factors that are relevant to why you are refinancing: fees, rates, and the amount of interest over time.
We hope this article proves to be useful when it comes to helping you gain a better understanding of refinancing home loans. While it may seem complicated, refinancing home loans can be a good option for you if the situation is right. Be sure to keep everything you’ve learned here in mind so that you can make the most informed decisions regarding your finances.
If you’re looking for a broker to refinance your mortgage in Melbourne, we have got you covered. With over 10 years of experience, our proven mortgage broker can find the right deal for you. Mortgages are a lifelong expense and investment in your future. Contact us today and let us research and calculate the best deal for you before making big financial decisions.