Refinancing

Managing multiple loans can be difficult – and stressful. One way to simplify your financial situation and save yourself time, effort and (hopefully) money is to centralise your debt. But it’s not always…
With interest rates at record lows and competitive deals on offer, switching to a new loan or lender may be an appealing prospect, with the potential to make significant savings. Since the Reserve Bank of Australia (RBA) began its latest round of rate cutting, lenders have been lowering mortgage interest rates across the board, with several now offering rates below the 3% mark. But before you make the decision to refinance, there are a number of areas to consider. Here we cover off some questions you should ask before making the switch. Will I be better off in the long run? Refinancing to a lower interest rate can be a great way to lower monthly mortgage payments, freeing up some of your income for
Buying a home is probably one of life’s most important milestones, so getting the right home loan tailored to your specific needs and circumstances is essential. When it comes to home loans, there are many factors to consider besides interest rates. Choosing the right home loan could not only provide flexibility as your financial situation changes but could also save you some money down the track. Here is an explanatory guide to some of the more common home loan features and, importantly, how they work. Redraw facility A redraw facility allows you to dip into any extra funds you have put towards your home loan, providing you are ahead of your repayments. While drawing on these funds will reduce the benefit of your additional
If you applied for a home loan in the current financial environment , your lender would probably assess your application in the context of both your credit score and your credit history – on top of your income, assets, liabilities and living expenses. Your credit score is a number calculated by a credit-reporting agency, which compares you to other borrowers and categorises your credit risk profile. The higher your score, the lower your risk: i.e. you’re ‘less likely’ to record a default or bankruptcy on your credit file over the next 12 months. What’s changed? On 1 July 2018, Australia moved to a positive credit reporting system. This brings us in line with other OECD countries, and means credit providers are obliged to provide credit-reporting
As a home owner with a mortgage, chances are you’ve heard of the term ‘refinancing’. Refinancing involves reviewing your current mortgage, and potentially swapping your loan to another lender who can better meet your current needs, wants and circumstances. Refinancing can also allow you to consolidate your debts or pay down your mortgage more quickly. Another common reason borrowers look to refinance is so that they can access equity – the amount you’d get from selling your home after settling any associated loans, such as a mortgage on that property, and any other costs associated with the property. Depending on that amount, you may be able to access equity in the property without having to sell it, for example, to make home renovations or
Confused about the ins and outs of mortgage refinancing? There are two key considerations when you’re looking at taking the step – why and how. Here, we examine both. A home loan is generally a long-term proposition, but in some situations it can be suitable to refinance your mortgage. Refinancing involves taking out a new mortgage and using those funds to pay off your existing mortgage. Doing it right could deliver significant financial gains over time. The two key things you need to know and understand before you go ahead are your reasons for doing it and how to go about it. Good reasons to consider refinancing (1) You want a lower interest rate The loans market is highly competitive and interest rates can
Refinancing can be a great way to save money if you believe you are paying too much for your loan, but there is more to it than just finding a loan with a lower interest rate and making the change. Before making the switch, ensure the savings you could make outweigh the fees involved. Here are the different exit costs to consider: Exit fee Although loans taken out after 1 July 2011 are not subject to deferred establishment, or exit, fees, those taken out prior may still be. Also known as ‘early termination’ or ‘early discharge’ fees, they can sometimes be paid by your new lender but are normally applied to an early contract exit. Establishment fee Also known as ‘application’, ‘up-front’ or ‘set-up’
Asking how long it takes to get a loan approved is like asking how long a piece of string is. Every application is unique, so the time between your first contact with your bank or broker and approval can never be predetermined. There are, however, some things you can do to help hurry your application along. Although very rare, same-day loan approvals are possible depending on the lender’s criteria, the complexity of the deal and turnaround time. In my experience, this has been possible when the client’s lending position is fairly straightforward in terms of employment, asset and liability position. Also, if a valuation wasn’t required due to a low LVR and both parties were happy with the contract price. If you’re not prepared,
Following the lodgement of a home loan application, hopeful borrowers are often keen to know what will happen next and how long it will take for them to receive the verdict. The bad news is that there is no one-size-fits-all answer. The good news, however, is that a solid application is the key to keeping the approval time short. The amount of time it takes for you to receive a response to your home loan application can vary. An answer is usually received between two days to two weeks, depending on a range of factors. For a reasonably straightforward application, it’s 48 hours to a final approval. But, depending on how complex the circumstances are, it can take longer than that. Before offering conditional

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