Refinancing a loan can take advantage of lower interest rates to bring down the overall cost of servicing a loan. But it’s not always the best, or the only, option.
There are many different factors borrowers need to consider when thinking about refinancing a loan.
The first step is to speak to a credit adviser/ mortgage broker about your needs and whether you can afford to service a different loan structure.
The current value of the property is also taken into consideration, so the credit adviser will have access to current data that will indicate what the asset is worth.
Then credit advisers will have a look at the various loan options and figure out whether it’s worth it for the borrower to refinance. It’s not usually worth it if it’s only going to save a couple of hundred dollars a year, taking into consideration exit and application fees. But if it’s going to save upward of $1000 a year, refinancing might be a sensible approach.
Another key consideration is lenders’ mortgage insurance (LMI). If switching loans means you will need to pay LMI again, sometimes it’s not worth refinancing.
If you want to refinance just to lower lending costs, ask your credit adviser to negotiate with the bank for a lower rate.
If you do decide to go down the refinancing path, working with a credit adviser rather than going straight to a bank has advantages because the adviser has access to loan options from scores of different lenders.
Credit adviserscan compare lots of different lenders and, if there is a better opportunity, they’re able to access it. Credit advisers are always working to give you great advice that’s in your best interests.
If you’re thinking of refinancing your existing home loan OR trying to lower the costs of your loan, please contact me 1300 30 6767 for an obligation free discussion regarding the same.