Refinancing your mortgage can bring you multiple financial benefits.
"Refinancing" allows you to alter your mortgage to suit your changing needs. As mortgages have a number of extra features, it's best to choose the one that best suits your needs.
How Mortgage Refinancing Works
Firstly you take out a new mortgage, you then use some or all of the funds to pay out your existing home loan
. The new loan often comes from a different lender, however you may wish to stay with your current lender. If you change lenders, your new lender will organize paying out your existing home loan.
Advantages of Refinancing your Mortgage
Most people refinance for one of the following reasons:
- To make improvements to your home i.e extend/renovate.
- To consolidate your debts.
- To change to a lower interest rate.
- To change from a variable rate to a fixed rate interest rate, enabling you to have control of your monthly repayments.
- To changing from a fixed to variable rate, enabling you to pay off your home loan faster.
Costs Involved in Refinancing your Mortgage
There maybe some costs associated with refinancing your mortgage
. These include: Stamp duty, mortgage insurance and early discharge fees.
- Lenders Mortgage Insurance: payable when more than 80 per cent of the value of your property is loaned. Lenders mortgage insurance generally costs more than one per cent of your total property's worth.
- Handling fees, Application fees and settlement.
- If you happen to repay your loan before its due date you may incur an early breakout fee.
- Valuation fees.
- Discharge fees associated with your existing mortgage.
- Government Registration fees associated with your new mortgage.
What to do next if you are thinking about refinancing your mortgage
Rate Detective provides you with many tools to help you refinance your mortgage.
Our home loan comparison tool allows you to compare home loans from a large selection of Australian lenders. You can also calculate your repayments with our exclusive mortgage calculator. For more information about home loans and refinancing your mortgage feel free to contact us or complete the form on the right.