A Homeowners Guide to Home Loan Refinancing

By the resi financial blog team, 12 November 2014

A guide to refinancing

If you are thinking about refinancing your home loan and don’t know where to start - this beginners guide to refinancing for homeowners is for you.

From explaining the basics, outlining the process and highlighting the top things you need to know – this guide will help you make a decision on the best option for you.

What is refinancing?

Refinancing most commonly refers to the process of moving a home loan from one lender to another – paying off the original home loan with the money from the new home loan. Refinancing can also refer to when you take out a new home loan against the same property with the same lender.

Why refinance your home?

There are a number of reasons why you may want to consider refinancing your home loan. Some of the main benefits are:

1. To save money – if you find a home loan deal with a lower rate of interest, you may consider changing your home loan provider

2. To raise money against your home – this money could be used to fund home improvements or for debt consolidation

3. To get a more appropriate home loan deal – if your personal circumstances change, you may look to switch to a home loan with different terms or features.

Things to consider before deciding to refinance

Refinancing can save you money, but there are a few things to consider:
1. There are costs, fees and charges associated with refinancing; such as:

- Early settlement or discharge fees on your existing home loan
- The lender’s legal fees
- Application and establishment fees of a new loan

Take a look at your current home loan and get to know the terms and conditions – consider the short and long term implications.

2. Are you happy with your current home loan? Is the rate of interest competitive with the rest of the market and are you happy with your current home loan provider? Make sure you avoid just chasing low interest rates – consider all of the other benefits your current home loan provider offers you. 

3. Financial situation: changes happen in our personal lives that impact our finances – marriage, children, redundancy or illness. Be clear on what you want from your new home loan – do you want the same type of home loan again, or have your personal circumstances changed? Consider what features and the long-term implications of the new terms and conditions.

What should I do next?

Speak to you current lender. Before you start looking around at other deals and home loans, arrange an appointment to speak to your current home loan provider. They may be able to offer you a better deal, or one that better suits your current situation. It can be quicker and cheaper to remain with the same provider, as you could avoid many of the charges associated with changing to a new home loan provider.

Do your research into what products are currently on the market and which have features and deals that fit with what you are looking for. Use mortgage calculators to get a better idea of the repayments you would be required to make, as well as fees, interest rates and key features.

If you’re interested in refinancing your home, then speak to the experts at Resi today for more information and advice.


Categories: Home loan refinancing, Refinancing