If your home loan is no longer meeting your financial needs or your bank arrangements have changed, you might consider refinancing to another lender. Refinancing could save you money over the long term. A Mortgage Broker will shop around and find a loan that will meet your financial objectives and goals. This may include, finding a loan that has better features or lower interest rates and fees. It is very important to find out if you will have fees to payout your home loan before you make the switch. A broker will make sure that it is viable for you to change lenders first. Brokers are great to deal with because they will do all the leg work for you and give you choices that your current bank might not be able to.
We are mindful of our customers who have less than 20% equity in their home as these loans will attract mortgage insurance again. This may make changing to another bank out of the question because it is too costly to do so. Banks will generally charge a penalty fee to break out of a fixed rate home loan so we always explain this to your customers when they consider taking out a fixed product. Notwithstanding this, sometimes the benefits of refinancing out way the costs to do so. If you are on a higher interest rate and we can find you a lower rate with little fees, you could potentially save thousands in the long term.
Once the loan is formally approved, you must complete a Discharge Authority for the outgoing bank. Your broker will organise this for you. This form gives notice to the outgoing bank that you intend on paying out the loan.
Some Lenders allow you to do a Fast Refi. This is where the new bank will payout the old loan before the current lender even knows about it. The title is insured and will be transferred to the new bank once the old bank is made aware that their loan has been paid out. Your broker will let you know if this is possible.
Why would you refinance your home loan:
- You may have had a falling out with your current lender
- Your current home loan may have a higher interest rate
- The fees on your current home loan are excessive
- Your bank is not providing the kind of service you expect
- You have other loans or debts that you want to add to your home loan
- You feel your bank does not understand your financial goals
- Your situation has changed and you need to change your home loan
- You have had your mortgage with the same bank for many years and want to change
- You are looking at an equity loan to do renovations and might as well review your home loan