Whether you’re looking for a new home, considering a new job or a life venture, it won’t be long before you put the task of refinancing your mortgage on your priority list.
With the pandemic and Great Resignation in our thoughts, thousands of Australians are contemplating their future and how to achieve their dreams.
With the start of interest rate rises, many homeowners are refinancing their mortgages to lock in a low rate, climb the property ladder or free up cash for lifestyle options.
As an experienced mortgage broker, I’m seeing a huge increase in clients wanting to investigate their refinancing options.
Recently, the Australian Bureau of Statistics said that for the 12 months to last June, 16% of homeowners and 13% of investors had switched lenders.
You can save serious cash by shopping around.
We should explore your options together and discuss whether a variable rate, fixed rate or a split loan will work best. Using a mortgage broker will give you the best opportunity to quickly and easily understand the deals in the market right now.
Watch out for these traps if you are looking to refinance:
Extending the loan
Your monthly payments will fall, but you’ve just kicked down the road your goal of paying off your debts. The bottom line is that you will pay more in interest. Instead, take the refinanced loan for the period that remains on your existing deal.
Rate fixation
It’s tempting to jump straight to a fixed-rate loan with higher interest rates looming. But it’s important to know that key features, such as an offset facility or the ability to pay early without incurring fees, are often missing from fixed-rate loans. A broker will help you understand the true costs of each offer.
Price of refusal
You want to be confident you’ll be accepted for a loan when you apply. Refusals hurt your credit score, and that piles agony upon agony. So, let’s be clear about what it takes to qualify for a loan with each selected lender.
More insurance
If you try to refinance beyond 80% of your home’s value, a lender may ask you to pay Lenders Mortgage Insurance. This is a policy that protects the lender should you default. It’s expensive and doesn’t benefit you.
This article is provided for general information only and does not take into account the specific needs, objectives or circumstances of the reader. Before acting on any information, you should consider whether it is appropriate for your personal circumstances, carry out your own research and seek professional advice.