Market conditions keep changing, and refinancing can be a step in the right direction for many borrowers. Refinancing your home loan is similar to applying for a new loan; you’re looking for the best loan option available. That’s why you need a mortgage broker who can tell you the best way to refinance your mortgage and the right time to do it. If you’re planning to consult a mortgage broker before refinancing, make sure you’re ready with a set of questions.
Top 10 questions you should ask your mortgage broker when refinancing:
1. Will refinancing benefit my current situation?
Good mortgage brokers can help you determine if refinancing is a good move for you. Depending on your goals, you can benefit from refinancing through:- Cheaper interest rates
- Lower monthly repayments
- Consolidating debts such as credit cards and car loans into one monthly repayment
- Paying off your home loan sooner
- Accessing equity in your home for extra cash
2. Will there be any break costs? If yes, how much?
You’ll need to know if there are any break costs involved when refinancing. Normally, these costs apply if you break the fixed-rate contract and switch to a variable-rate home loan. Break fees can be substantial, often over $10,000. You can estimate the break costs you might incur by using our break costs calculator.3. Should I refinance to consolidate existing debts?
You may be able to save a lot of money and time by consolidating debts. However, in some instances, consolidating could hurt your finances in the long run and you might end up making higher monthly repayments. Ask your mortgage broker whether consolidating debts is the right option for you.4. How much does it cost to refinance?
Refinancing comes at a cost. It’s better to have an approximation of the upfront fees before you refinance. These costs may include:- Upfront fees your new lender charges
- New loan application fee
- Fee for getting property value assessed
- Lenders Mortgage Insurance (LMI) if you have more than 80% of the purchase price owing on your refinance loan
- Stamp duty fees, depending on your state of residence
5. Which lenders offer a refinance rebate?
Some lenders offer you money to refinance your mortgage with them. This is called a refinance rebate. These offers usually don’t last long, which is why it’s best to ask your mortgage broker if you can benefit from an existing offer before it ends.6. Will I be able to access the equity in my home?
Accessing equity is one of the most common reasons borrowers refinance. You could draw funds from your equity to:- invest in property
- renovate your home
- consolidate your debts