Call 1300 633 667

What is refinancing and why would I do it?

What is refinancing and why would I do it?

  June 24, 2020

What is refinancing and why would I do it?

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 to another lender who can better meet your current needs.

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. Equity is the difference between the value of your home, and how much you still owe on it.  Depending on that amount, you may be able to access equity in the property to make home renovations or to buy an investment property.

However, refinancing is not suited to everyone. There are many different factors you will need to consider when thinking about refinancing a loan. Before you initiate an application to refinance, we will need to assess your needs and objectives as well as your current financial situation.

So how will you know that refinancing is the right option for you?

The first step is to speak the team at MC Mortgage Solutions about your needs.

Are you looking to pay less interest?

Some people are savvy researchers and want to take advantage of lower interest rates from other lenders should that be available. If you aim for a lower interest rate, this could potentially save you a lot of money in the long term.

While saving money is often one of the biggest benefits of refinancing, it may not be as straightforward as that.

At this point, we will need to find out about your existing loan, repayments and current loan structure.

We will also need to find out more about your current financial situation. This includes reviewing  your income, other current debts and your assets.

The current value of the property is also taken into consideration.

We will then review the various loan options and figure out whether it’s worth it for you to refinance. Sometimes it’s not worth it if it’s only going to save a couple of hundred dollars a year, especially if there’s exit and application fees involved. But if it’s going to save upward of $1,000 a year, refinancing might be a sensible approach.

In some cases, we can tell you if getting a lower interest rate from your current lender can be achieved without refinancing.

Do you want to change your loan type?

One of the risks of refinancing your home loan is that you may need to pay Lender’s Mortgage Insurance (LMI)* to your new lender. If switching your loan means you will need to pay LMI again, it may not be worth refinancing.

If you do decide to go down the refinancing path, working with us rather than the bank has advantages. We have access to loan options from a range of over 60 different lenders. So if there’s a better opportunity for you, we’re usually able to access it.

It is important to consider that when you take up a new home loan it can incur exit fees. It also may not have all the features your existing home loan has.

Have your circumstances changed?

If you had a recent major life change such as a because of a loss of income or a change in marital status, you might be looking to refinance.

We can also help you look at alternate options to consolidate your personal loans and credit cards into the one loan. This could help you in lowering your monthly repayments, or help you keep your repayments on time and even save you interest in the long-term.

For more information about refinancing call MC Mortgage Solutions today on 1300 633 667 or click here to get started.

*LMI protects the lender against potential loss.

Have a question?

MC Mortgage Solutions would love the opportunity to discuss your circumstances with you. Whether you have found a house or are just in the planning stages it's never to early or late to make sure your finance is right for you.

Book an appointment
MC Mortgage Solutions

MC Mortgages was established with one clear goal: to be more than just brokers. With this compelling vision in mind, we have created a brokerage that is focused on looking beyond the customer’s initial request and taking a holistic approach to all their needs.

Recent Articles

  • Albanese govt reforms first-home buyer program
    Albanese govt reforms first-home buyer program

    Albanese govt reforms first-home buyer program The federal government has made it easier for first-home buyers to access the First Home Super Saver Scheme. Previously, if first-home buyers wanted to…

    More..
  • Why ANZ’s $4.9bn acquisition of Suncorp was rejected
    Why ANZ’s $4.9bn acquisition of Suncorp was rejected

    Australia’s competition watchdog has refused to authorise ANZ’s acquisition of Suncorp Bank. The Australian Competition & Consumer Commission (ACCC) said it had rejected the $4.9 billion deal, which was announced…

    More..
  • Vacancy rates rising, rental growth slowing
    Vacancy rates rising, rental growth slowing

    A leading property data analyst believes that while property investors continue to hold the balance of power in the rental market, the rental crisis among tenants is now starting to…

    More..