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- Have a "Home Loan Health Check" ....You could save thousands by refinancing to a cheaper, lower rate loan.
Why refinance? ...
There are a number of good reasons why you might want to refinance your loan including...
You can also refinance to access equity for investment. If you are in this category then it will also be useful to see our Investment property loan page.
Save Money With A Lower Interest Rate
All the lenders in the market are continually competing against each other for your loan. That’s part of the reason our industry (mortgage broking) exists. Because we are not tied to or influenced by any lender, Home Loan Advice Centre are able show you who'll give you the best deals from a wide choice of lenders. In fact our software compares over 25 of Australia's main lenders on interest rates, lending amount, loan features, and costs.
Different lenders release different special deals at various times and therefore there is a good chance that we can find a deal that will save you thousands on your loan. We can show you how your interest rate compares to other rates in the market.
If more stability and confidence of your repayments is what you're after then perhaps you may want to consider fixed rates. Fixed rates are more determined by activity of the fixed rate traders within the major banks and although influenced by the opinions of the Reserve Bank of Australia (RBA), they are not absolutely tied to the rates that the RBA set from time to time. Because of this mechanism, the fixed rates that the lenders have on offer tend to vary more than the variation seen between variable rates. Speak to us to find out how the lenders compare. To find out more about fixed rates – see our Interest rates page.
Access Your Home Equity
More and more people are refinancing to access the equity in their property for purposes as varied as renovation, personal purchases, or consolidating higher interest debt (such as car loans, personal loans, or credit cards) into lower rate home loan debt.
The key is if you have sufficient equity in your property. Equity is the difference between what your property is worth and the loan you have on it. Take for example John with the following situation ….
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Home ($500,000) |
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minus |
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Loan ($300,000) |
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equals |
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Equity ($200,000) |
For example - John has $200,000 in equity and he may be able to refinance his loan to release an extra $50,000. If he has no immediate use for these funds, then with most lenders, he can simply place the funds straight back into the loan (or offset account if he has one) so that he pays no interest on the increased amount ($50,000) until he finds a use for it. So essentially he is virtually in the same position as when he started above ie he still has $200,000 in equity in his home. The only difference now is that $50,000 of his $200,000 is immediately accessible where as prior to the refinance all his equity was tied up in bricks and mortar!
Only when he finally decides to use the funds will he start paying interest on the amount he withdraws for use.
John may very well decide to leave his additional funds within his line of credit loan for now and continue, as he was prior to the refinance, paying his regular loan repayments based on his $300,000 loan. At any time in the future, say in 6 months time, he might decide to redraw $20,000 for a new kitchen, $10,000 to purchase a new car, and $5,000 to pay down his credit card debt. Only then would he begin to pay interest on the extra amount that he has redrawn.
Consolidate debt
Provided you have sufficient existing equity in your home you may also be able to refinance your home loan to pay out higher interest rate loans you may have ie car loans, personal loans, or credit card debts. This may allow you to capitalise on the lower interest rates offered by home loans and could decrease your overall monthly expenditure on debts. Speak to us to determine whether your situation allows such debt consolidation because different lenders have different rules and regulations on combining personal debt into home loan debt. Ideally if the final loan to value ratio of your debt consolidation is less than or equal to 80% you will have most flexibility with your choice of lender however there are lenders who may go as high as 90-95%.
Home Loan Advice Centre's loan service is provided to you completely free of charge. We can do this because our lenders (30 of Australia's main lending institutions) pay us commissions based on the wholesale volume of loans our group refers to them. We can therefore, offer you our experience and expertise, and guide you through the entire home buying journey, without charging you a cent. You end up with exactly the same loan if you'd organised it through a bank yourself, but we do all the leg work and negotiations with the banks for you ..... a great result! So if you are looking to buy a home or investment property visit our 5 minute online enquiry form. We'll assess your loan options and send you a full report of your capacity. Also we'll include parts 1 and 2 of our eCourse ... an indepth guide to buying property in Australia. Click to see a sample. |
For more information please call Home Loan Advice Centre on 02-9210-1000 or see the following links…
