I’m continually notifying my clients about their choices when it comes to refinancing their mortgage, but before you go away and refinance your loan over another 25 or 30 year term there are 5 key points for you to think about, and I’ll share these with you.
1. What are the benefits?
Every conclusion we have in our lives comes back to the age old question of “what’s in it for me?”. For you to be considering a refinance, there must be some apparent benefit for you in some shape or form. You’d desire to profit by either having your repayments reduced (which would free up some much need cashflow), a lighter interest rate or a much more competent loan structure. The important gain of a refinance for most of my clients is to get all of their outstanding debts under the one roof. This results them with just the one, low simple repayment to worry about and some well gained peace of mind!
2. Is my broker licensed and experienced?
Most sound brokers in Australia should be approved with the MIAA, FBAA and hold accreditations with a huge number of loaners. The longer your agent has existed in the home loan industry, the more improved his or her knowledge base. The more seasoned your broker results in a simpler, pain-free process. As a mortgage broker develops experience, their knowledge of what deal is best suited with what bank increases.
3. How long will I be in the place for?
If you are only planning to stick in the property for a relatively short period (a year or two) then you would want to miss any loans that charge early payout/discharge fees as well as any loans that corner you into an stiff fixed interest rate. If the property is a short term deal, then I’d advocate viewing an equity styled loan which really gives you a tremendous amount of flexibility and freedom. If you are designing on being in the place for the long term then you want to find a loan that has low interest rates and very few account keeping fees.
4. How will refinancing hit my credit rating?
Everytime you go for credit with a loaner, they’ll set a credit check on you (usually with Baycorp Advantage). The credit check itself gives an enquiry on your credit file, but these enquiries does not hurt your credit rating whatsoever. As long as there isn’t a large amount of queries listed on your file, no alarm bells will be set off.
5. Should I get independent consulting?
When getting a loan, you are supplied with a set of bank documents to sign when the loan has been approved. When signing your bank documents the lenders urge that you sit down with your finance broker or bank officer to explain precisely what they mean. If you are in need of any advice interpreting your documents, please don’t hesitate to reach out to your loan broker, accountant or lawyer as they will be able to walk you through them and resolve any wonders you may have.
I hope that you are able to take something out of from reading these 5 assistive and handy tips on refinancing. I’ve also just included 2 other points which will help you in the long run!
A few more reasons to refinance your home loan are:
– To change over to an Equity Loan: You want to refinance your loan to draw cash from your home’s equity for debt consolidation, home improvements, investments or other uses.
– Paying Off Your Mortgage Sooner all relates to the fact that you ramp up your equity in your home quicker and pay off your loan sooner by refinancing your home loan onto a more efficient and effective structure that in reality gets your money working for YOU and NOT the banks!