Your Empowering Guide to Refinancing a Mortgage

Owning a house comes with its own set of financial considerations, one of which is whether or not to refinance your mortgage. Refinancing may appear scary at first, but it may provide many benefits for homeowners trying to better manage their changing financial situation. In this blog, let’s define refinancing a mortgage and look at how it can benefit you.

Understanding Mortgage Refinancing:

One of the key reasons for refinancing is to benefit from more competitive interest rates & loan terms as a new customer. 

Key Reasons to Consider Mortgage Refinancing:

Switching To A More Competitive Interest Rate:

To avoid paying more interest over the life of the loan than you need to, it is advisable to research new customer rates available in the market. It is common knowledge that often, loyal customers are paying a ‘lender loyalty tax’. But searching for a mortgage on your own can be a time-consuming task. From researching lenders and comparing rates to filling out lengthy applications, the process can feel overwhelming. Partnering with a mortgage broker has many benefits: they do the legwork for you including managing the paperwork, communication with lenders, and negotiating on your behalf. This allows you to focus on other aspects of the home-buying process with more confidence.

Changing Loan Terms:

If your financial condition has improved, you may choose to refinance to a loan with a shorter term. This may help you pay off your mortgage sooner and reducing the amount of interest you pay over the life of the loan. Alternatively, extending the loan period might lower your monthly payments, potentially giving you more cashflow freedom.

Accessing Home Equity:

You may use refinancing to access your home equity, which is the difference between the value of your property and the outstanding mortgage debt. This can be handy for funding home upgrades, debt consolidation, or other large needs.

Switching Loan Types:

Homeowners with variable-rate mortgages (VR) might choose to refinance into a fixed-rate mortgage (FR) to secure a consistent interest rate and more predictable monthly payments. 

The Refinancing Process

Let’s break the process down for a clear understanding:

1. Discovery session

This is where a mortgage broker will spend time with you understanding your unique situation to determine your needs and financial goals and objectives. This can usually be done via the phone, video conference, or face-to-face.

2. Information gathering

You will be advised of the required documents needed as part of the process so the mortgage broker can carry out their checks and balances and determine loan serviceability.

3. Lender options

Your mortgage broker will take all of the information learned and research for lender options that are within your best interests then present them to you for discussion.

4. Loan application

This part of the process involves the mortgage broker preparing the loan application to submit to the lender for approval.

5. Settlement process

After approval has been achieved, a mortgage broker will then manage this process right up to settlement.

Ongoing loan support

The relationship doesn’t end there. A good mortgage broker will periodically review your loan to ensure it is in a competitive position and be there to answer your questions.

Buying a home is exciting and a little scary too. But you don’t need to do it on your own! Whether you’re a first-time buyer or have done this before, getting help from a mortgage broker, like Cara Julian Mortgage Broker, is a smart choice to ensure your lending solution is right for you.

Disclaimer: 

This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax, or financial advice and you should always seek professional advice in relation to your individual circumstances.

Licensing statement: 

Credit Representative 540557 is authorised under Australian Credit Licence 389328. Your full financial situation would need to be reviewed prior to acceptance of any offer or product.