Refinancing is the process of acquiring a new home loan that is better suited to your current financial situation. It can be achieved by paying out your old loan with the new loan from the same or different lender so that you can take advantage of the latest offers.

Thinking of re-financing?

Most people think about refinancing when the interest rates rise, or fall. If you’re locked into a fixed rate facility and can see interest rates falling, you might consider refinancing to take advantage of the lower rates to reduce your monthly repayments. In the same way, if you have a variable rate home loan and are being affected by rising interest rates, you might want to lock yourself into a fixed rate so that you can plan your monthly repayments.

If you have had your loan for less than 2 years, there may be some fees and charges in switching your loan within a particular period. It may be worthwhile to compare the fees with the overall savings and features of the new loan package and making a decision based on the long term benefits.

People may also choose to refinance their loans to consolidate their debts, to purchase a new vehicle, to renovate or to buy a new home. You can use your home equity to service additional loans or have a line of credit that you can use to either purchase an additional property or upgrade your home. Consolidating your debts can simplify your finances and result in a cheaper outcome overall. Using your equity to organise car finance will offer you a much more competitive rate than other car financing options.

Benefits of Re-financing

The benefits of re-financing can help you reduce the overall cost of your loan, reduce your monthly payments or allow you to access features of new loan products that better suit your current financial needs. Loan features to consider when refinancing are:

  • Redraw facilities
  • Offset account
  • Loan portability
  • Additional repayment options
  • and others

If you’ve locked yourself into a fixed-rate loan, you might decide to take advantage of lower variable rates and refinance your existing loan to afford you that flexibility. It is important to consider the costs of refinancing which will depend on the terms and conditions that you’ve accepted from your current lender, and the different features that you’ve built into your loan that may accommodate the costs of switching.

Cost to refinance

There are several costs that we can help you evaluate when deciding to refinance. Some of them are the costs you expected going through the process the first time such as Loan Mortgage Insurance or Stamp Duty. In addition to these costs, you may have to also pay a Mortgage Registration Fee to register your mortgage to the title record for your property. This is a cost that may be required by the Land Titles Office. There may be additional fees from the new lender too which can include a Valuation fee, Application fee and/or a Settlement fee. It is best to discuss these potential fees with your broker in order to understand the true cost of re-financing. The team at Bayside will consider all these things so that you don’t get caught unaware.

If you are on a fixed rate loan, you may have to pay a break out fee if you exit before the end of the fixed rate term. Some lenders may also charge a clawback fee to brokers which pass on that cost to the borrower in the event of the early termination of a loan. We can help you evaluate the best option for you after taking your costs into account. Speak to us today about your contract and we will advise you of your options.

Re-financing your loan

If you are ready to re-finance, or considering re-financing, speak to the Bayside team. We will walk you through the process and make sure that you have all the information and comparisons you need in order to make the best decision.

The team at Bayside are dedicated to providing an exceptional service. If we cannot beat the deal that you have, see a feasible alternative or offer a value-add that is attractive to you, we will let you know up-front.