Home loan refinancing is when someone with an existing home loan switches to another home loan. This can be done with a new lender or with the same lender. There are various reasons why people refinance their loans.
Switching to a different home loan can have many benefits. In the main, people refinance for a lower interest rate and/or to top up their loan for any worthwhile purpose. It is very common for borrowers to want to consolidate all of their loans within their home loan. That is, they want to consolidate their car loan, personal loan & credit card into their home loan. In most cases borrowers refinance their loans for a cheaper interest rate which enables them to pay off their loan faster, thus building equity within their property quicker. Some borrowers refinance their loan so that can they can take advantage of the features that come with the loan they switch to.
It is quite common for borrowers to have a number of different types of loans, e.g. a home loan, a car loan & a credit card. In this instance borrowers find it difficult to budget when they have various loan repayments going out at different times of the month. In many circumstances by refinancing & consolidating their various loans into one, it makes for 1 repayment per month making it far easier to manage. Consolidating your loans into your home loan may actually reduce monthly outgo on loan repayments. You may also be able to save interest as car loans & personal loans are usually associated with higher interest rates. You need to be a little careful here in that you are taking short term debt, e.g. car loan & refinancing it over a longer period of time, i.e. the home loan.
Refinancing loans to reduce your interest rate can not only save you thousands of dollars in interest, but it also allows you to build equity in your home more quickly. This can allow you to access equity in your home which can be used for renovating or investing in another property. Refinancing can help pay off your home loan quicker thus saving you possibly thousands in interest. Even if you refinance to a cheaper interest rate & lower monthly repayment, at Better Choice we encourage our clients to keep paying the higher repayment so that helps pay their loan off far quicker. This means you may own your home sooner!
Loan refinancing can also allow you to access different features and flexibility from your new home loan. Refinancing home loans may be a necessity when personal circumstances change such as redundancy, separation/divorce, pregnancy, and retirement. These all have effects on loan repayments and require an individual to consider options such as whether a fixed rate or a variable rate will better suit your situation.
Although there are many benefits to refinancing there are potential pitfalls, meaning refinancing is not suitable for every person with a home loan. However, it is made easier if you have an experienced Mortgage Broker from Better Choice Mortgage Services.
Better Choice Mortgage Brokers will always keep you up to date with the best home loan deals in the market place. How can we do that? Well we have more than 35 different home loan Lenders on our panel & they are all very keen to get your business. A Better Choice Mortgage Broker will always let you know the pros & cons of refinancing your home loan & whether there is a real benefit for you to move forward with refinancing. There are also costs involved in refinancing home loans. These include exit, break and start-up fees and lender’s mortgage insurance.
Another important reason to use a Better Choice Mortgage Broker is that your financial future is our overwhelming driving force. If we can’t demonstrate to you a tangible reason/s to refinance, then we will not proceed.
Your Better Choice Mortgage Broker can help ensure that refinancing will not mean you end up paying more. The cost of refinancing your home loan must be significantly outweighed by how much you will save via the lower interest rate. Better Choice Mortgage Brokers will compare home loans from a wide variety of lenders and will use their expertise to find you the most suitable home loan for you. As they are professionals, they know what features will suit your needs and wants.
If you would like a free mortgage check please contact us so we can expertly review your finance with no obligations.
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