EZY LOANS AUSTRALIA · REFINANCING GUIDE
Is Your Home Loan Still Right For You?
Our complete guide on what to consider when it comes to refinancing – rates, features, equity and how a broker finds you a better deal.
Do you know how well your current loan stacks up?
Since you got your home loan, chances are that interest rates may have moved, and life has too. Has the official cash rate changed since your current loan settled? Has the rate your lender is charging you changed? What about the fees and charges? Chances are the market has changed too. New products designed to attract borrowers are always being introduced, and lending appetites are an ever-moving feast.
When refinancing is worth it, the features to look for, and the full list of switching costs.
Let us not forget that things have probably changed in your life too since you took out the mortgage. Your income may have changed, and your expenses probably have too, and your financial goals could also be different. Even though most loans are around 30 years in length, you may be surprised to hear that Australians often change their home loan every four to five years as they refinance.
Refinancing is a chance to look at what is out there and see whether your current loan is still the right one for you. If it is not, it may be time to refinance. If you are looking to switch, this guide contains some of the key things you may want to consider.
Why should you refinance?
Reviewing your home loan every year or two is a good habit to get into. As the market and your circumstances change, the home loan that was right for you then may no longer be the one that suits you now. You may be looking to save a bit of money, consolidate your debt, or unlock some equity you have built up in your home. Whatever your reasons, it is a good idea to see what is out there on a regular basis, though you should also bear in mind the long-term costs of increasing your borrowings.
Lower rates and fees
Obviously the first question to ask is, could you be paying less? A loan with a lower interest rate or fewer fees can be the simplest way to reduce your repayments. It means you can unlock a little more spending money, or better still, pay off more of your principal to clear the loan sooner.
It is not all about rates - features matter too
Sometimes the loans with the lowest rates also sacrifice features that are not only handy, but also save you money in the long run. For example:
Offset account
A separate account that lets you use the balance to offset the principal your interest is calculated on. Simply having your pay deposited into this account can take time off your loan.
Flexible payments
Paying extra into the loan when you have it is a great way to shorten your loan and save more in the long run.
Redraw
This lets you easily access any extra funds you have deposited into your loan whenever you need them.
Flexible rates
Depending on what you think rates will do - up, down or stay the same - choose the loan type that could save you money when they fall, or protect you if they rise.
Of course each lender will have its own terms and conditions, and it is important to consider the effects of these rules when choosing a loan.
Refinancing to renovate
One of the most common reasons to refinance is to renovate. If you have owned your home for a while and its value has increased, you may be able to use this equity to fund your improvements. An added bonus is that if you renovate well, you could potentially add more value to your property. If the extra funds for the renovation are put into an offset account, you may be able to avoid paying interest on the renovation funds until you start using them.
You could also consider a line of credit loan, which is essentially like a credit card with a bigger limit and usually a much smaller interest rate. These funds are available to draw down on as you undertake your renovations, and you only pay interest on the amount you have used.
What has changed in your life?
As a mortgage broker, we are very good at letting you know what has changed in the market. But when you are looking at refinancing, it is just as important for you to walk us through what has changed in your life, as this can be the deciding factor in what type of loan you refinance into. All of these factors will influence your new borrowing potential:
Your income
Hopefully it has gone up, but it may have dropped since you took out your loan.
Your savings
Your bank balance could have changed significantly through an investment, business interest or an inheritance.
Relationship & family
You may have had a change in relationship status, or you may be planning to start a family.
Living expenses
Your day-to-day living expenses may have increased since you first borrowed.
Other debts
You may have taken out other loans or credit cards that affect your borrowing.
Property value
The value of your property may have changed since you took out your current loan.
Talk to us about your options
When it comes to refinancing, you need to know exactly what is out there in the market to know what your options are. That is where a mortgage broker like us can help. We deal with lenders and evaluate loan rates and features day in and day out. We understand the current market and can offer a wealth of information and expertise for you to draw on. Not only will we help you find the right loan, we will aim to make the whole application and approval process much easier.
The first thing we will do is catch up and chat about your current loan and circumstances, find out what your needs and goals are, and how they may have changed since you took out your loan. We can then give you an accurate idea of your current costs, identify any potential savings from rates, fees or features, and re-evaluate your borrowing potential. From here we can help find the right loan for you.
As your broker, we will look for a loan that suits you and your circumstances. With access to multiple lenders and an array of different loan products, we stay up to date with changes in the market and new products as they come online. Once we have identified a loan that works for you, we take care of the application process on your behalf.
Why not go straight to a bank?
Of course you can go to a bank, but this can be more difficult than it sounds. Firstly, which one do you choose? Which of their products is right for you? And what about other lenders, building societies and credit unions? There are a lot of options out there and, with regularly moving interest rates and new products, it is an ever-changing market.
That is why a broker makes sense. We do this every day. We know the lenders and their products, and we keep up to date with changes to lender policies, products and their different lending appetites. Banks enjoy working with brokers, as we do a lot of the work for them and may help speed up the application process. Put simply, having a broker in your corner makes it easier to find the right loan, saves you time and, hopefully, money.
Using a mortgage broker is the smart way to go
- We provide real choice, looking to find you the right deal
- We work with multiple lenders, not just one, keeping competition alive
- We may negotiate a better outcome
- We help at a time and place that suits you, doing the legwork for you
- Our aim is to save you time and stress, and get things moving as quickly as possible
We're here to help make it easier
If there is something you do not understand or need more of an explanation, please just pick up the phone or email today. Talk to Ezy Loans for a free loan review and see if you could be paying less.
Written by Amrinder Singh – Mortgage & Finance Broker, Ezy Loans Australia. Credit Representative 505232, authorised under Australian Credit Licence 377294 (Mortgage Australia Group Pty Ltd).
This guide provides general information only and does not take into account your objectives, financial situation or needs. It is not financial, tax, credit or legal advice. Consider the long-term costs of increasing your borrowings, and any switching or break costs, before refinancing. All loans are subject to lender approval and eligibility criteria.
Ezy Loans Australia is a Perth-based mortgage and finance brokerage helping first home buyers, investors and refinancers across Australia secure the right loan with confidence.
Contact Info:
- 905 Hay St, Perth WA 6000
- amrinder@ezyloansaustralia.com.au
- 0432 066 362