Refinancing your Australian property

There are many reasons that can cause you to consider refinancing the mortgage on your property, but before you do so, understanding the process and appreciating what exactly will be involved is key.

Despite being a reasonably straightforward process, it’s crucial that you understand the options available to you, regardless of your reasoning for your refinancing decision.

The information below is intended to provide general information and does not take in to account the needs or financial situation you are in as an individual, and expert advice to guide and assist you in such an important financial decision is always advised before any decisions are made.

Why should I consider refinancing my Australian home loan?

Refinancing your home loan may be a really great option if you have been paying your mortgage in Australia for multiple years. Some of the usual reasons for individuals to choose refinancing might involve:

• Debt consolidation – Having several personal loans at once and paying them all separately may not be as financially viable as consolidating into one home mortgage payment, typically with lower interest rates over a longer space of time.
• Need to borrow more – Your equity that you hold in your property will have increased if the value of the property has gone up since you first purchased, meaning you have the option to replace your existing agreement with a higher one, leaving you with the surplus of funds left over to use elsewhere.
• Accessing new/better mortgage features – It is more than likely that many new features and mortgage benefits will have been developed since you first signed your original loan agreement. Certain packages with really helpful perks may now be available to you when you refinance (e.g. cash back deals, offset accounts, the option to make extra payments where needed).
• Lowering your mortgage payments – Overall loan costs could be decreased significantly if the right interest rates and perks are utilized correctly depending on your situation as an individual, therefore in hand paying off your mortgage quicker than planned
• Equity freedom – If your mortgage agreement is paid beyond 20% of the original property value, this could mean that it could be transferable to a line of credit, which could be extremely useful for either business or personal projects in the pipeline that need some extra supportive funding.

How does refinancing my home loan work?

The process of the refinancing itself will always be easier than when you originally applied for your mortgage. There are much fewer hoops to jump through and certainly less documentation.

The consistent payments of your ongoing mortgage that you have been making for months on end do most of the talking for you, the steps forward now will involve more on the negotiation side of things.

Before doing anything else, a little research on your behalf is always advisable. Having a look at refinancing home loan interest rates and comparing against your own current rate will allow you to see a direct comparison. Seeing that there are better, cheaper alternative rates will always solidify whether it is worth investigating your refinancing options.

Going forward, your next step is most likely to be talking directly with your current lender regarding your options. Your current lender will never want to lose your business, so discussing and negotiating with them to try and achieve a much more competitive rate can commonly fall in your favour.

If you have 100% decided to refinance, and your lender knows that that is the case, this is your advantage. It is either that you are granted a better rate, or you have to move elsewhere to an alternative lender.

When you then have this information, and better rates are on the table, it is the perfect time to really examine your expenses as a whole. Looking at the big picture and including all of the other likely added expenses such as break costs, exit fees or transfer charges can show you just how much better off you will be once done.

Really laying out all your potential charges and financial considerations on your potential new loan will help get everything in order for you to be able to make your decision on what is best for you.

After taking these steps and deciding that it is financially beneficial to go ahead with refinancing, your application can then begin with your lender. They can begin to take you through the necessary procedures needed in order to execute it effectively.

Overview of your refinancing plans

In short, refinancing can be a fantastic financial move when it means reducing your mortgage payments, the term of your overall loan, or to help build fast equity. It can also be an invaluable tool for better controlling multiple debt payments.

But ensure you are asking yourself the important questions regarding your decision;

• How much money will I actually save by refinancing?
• How long do I plan to continue living in this property?

If you are not planning to stay longer term in your home, the costs that you would have otherwise recouped (due to low interest rates/shorter term agreement) may cancel out any of the potential savings you have made from refinancing, due to refinancing costing 3% to 6% of the loan's principal.

Seek help if you are unsure or want to know the best options

As ever, when it comes to finance and mortgages, it's best to get advice from someone who has experience helping people refinance their property as well as an understanding of the most suitable options and access to the best loans.

We provide a free introduction to Australian refinancing specialists. As part of your free introduction you will be connected to an Australian mortgage specialist who will offer you a free initial consultation where they will review your situation and prepare some options.

Please visit our Australian mortgage introduction page to get started >