How do you know if it’s time to refinance your mortgage or consolidate your loans? Let me ask you another question. When is it a good time to put money back in your pocket? EVERY YEAR you should take a home loan health check to find out if the mortgage you have is still saving you money. A lot can happen in a year, life circumstances can change, you may have taken on extra debts and rates may have moved, so you owe it to yourself and your cash flow to check your home loan and debt situation every year.
Why people refinance their mortgage?
Every client at Assured is unique, just like you. The reasons to refinance or consolidate are unique also. You may be looking to;
- Invest in a new car to keep the family safe on the road
- Install a new pool so you can holiday at home
- Gain some extra funds to secure your children’s education
- Put in that new bathroom you’ve always been talking about
- Pay off your home quicker and gain financial freedom
- Build an extension for the new family addition or just gain some extra space.
- Increase your cash flow to give you a little breathing space
- Landscape your yard and create a great place to relax and play
- Reduce financial stress
- Use the savings you create each month to put away for a rainy day.
- Change to a home loan that has different terms which work better for you eg. No monthly account keep or redraw fees. 100% offset facility etc.
- Take a well overdue holiday
- Increase the term of your mortgage so that you can reduce the monthly repayments and free up cash flow
- Getting cash out of the equity in your home loan for whatever reason you feel is needed.
- Roll all your payments into one so you have one convenient payment and interest rate.
How does refinancing your mortgage work?
Simply trade in your old mortgage for a new one! Applying to refinance and/or consolidate your home loan is very much the same process as applying for your initial mortgage. To help jog your memory, an outline of the process is;
- Contact your home loan consultant and explain what your needs are.
- Your consultant will ask you some quick questions about your current financial circumstances such as your current income, current debts etc to get an idea of your position as it stands right now.
- Once this is determined your mortgage broker will research what home loan options are available to you, which home loan products best suit your current situation and of course which mortgage is going to help save you the most money.
- Once it is confirmed over the phone or by e-mail that you are eligible to proceed, a face to face appointment will be arranged at a time and place that suits you to discuss your loan options.
- All fees involved in refinancing and/or consolidating your home loan will be explained to you so that you are making an informed decision about changing your mortgage.
- Once you have decided on the best new home loan option for you, your mortgage broker will prepare the loan application, package it will all the information required and submit your loan application to your chosen lender.
- Once your loan has been conditionally approved, a valuation on your property will be completed to determine how much your home is worth and therefore how much equity is available to you.
- When your valuation is returned the loan is sent to a mortgage insurer for approval.
- On receiving this approval from the mortgage insurer, you are now considered to be formally approved and the lender can instruct solicitors to draw up your mortgage documents.
- The solicitor will also send instructions to your current home loan lender to let them know you will be discharging your loan. Quite often your lender will contact you to persuade you to stay with them, but stay strong! If that loan is not working for you it’s time to leave it behind.
- Once your mortgage documents have been returned, the solicitors will contact your old home loan lender to book a time to pay out that loan.
- Your loan is then booked for settlement. Once settlement of your home loan occurs, your new lender will payout your previous mortgage and any other debts you have nominated to pay out.
What about the refinancing costs?
There are certainly costs involved in refinancing your mortgage, however when refinancing you are often incurring these costs to gain a greater benefit. Common costs incurred may be;
- Home Loan application fee
- Property Valuation fee
- Mortgage Insurance (depending on how much you are borrowing)
- Solicitors documents and services fees
- Government fees and charges
- Stamp duty
- Title insurance
- Discharge fee
- Penalty payment