The benefits of refinancing your home loan are not just limited to saving you hundreds in monthly mortgage repayments.
By making the right choices and working with a mortgage broker, you can take a giant leap towards achieving your long-term financial goals.
The Benefits Of Refinancing A Home Loan
By refinancing your home loan, you can:
- Get a cheaper interest rate and lower your monthly repayments.
- Reduce your overall loan amount so you can pay off your loan faster and maximise your available equity.
- Access equity to buy an investment property, renovate, build and more.
- Bring your high-interest debts like credit cards, personal loans and car loans into a debt consolidation home loan.
- Save your home if your home loan is currently in arrears.
- Refinance from a specialist lender back to a major lender after you’re past your bad credit issues.
- Take advantage of tax benefits.
- Refinance to a home loan product that helps you pay off your home loan faster.
- Refinance to grow your business.
Discover more about the pros of refinancing below or, better yet, call us on 1300 889 743 and find out if you’re in a position to refinance your home loan.
You can also fill in our easy online enquiry form to start the home loan refinance process today.
1. No Serviceability Requirement
We know a major lender that is offering dollar-for-dollar refinancing with no serviceability required if you have a clear payment history in the last 12 months.
Dollar-for-dollar refinancing means your new loan will be for the same amount as your existing loan but with new terms, such as a better interest rate.
To be eligible:
- The new interest rate must be lower than the existing loan.
- The LVR must be below 80%.
- The new loan must be in the same name(s) as the existing one.
- There must be no change in the borrower’s primary income source since the loan was established.
2. Reduced Monthly Home Loan Repayments
Let’s say you have $500,000 owing on a 30-year home loan paying 4.20% per annum.
You’re currently paying $2,445 a month in home loan repayments.
Using the home loan repayment calculator, if you were able to refinance to a rate of 3.59% p.a., you would lower your monthly payments to $2,270.
This will save you $63,000 over the life of your home loan.
You’ll then be able to put these savings into an offset account to further reduce your interest bill or make extra loan repayments to reduce your principal debt.
By refinancing to a sharper interest rate, you’re reducing your overall interest bill and, therefore, your total home loan balance.
It also means that your loan amount on the current value of your property (LVR) will be even lower than before you refinanced.
This puts you in a powerful position as a borrower and a homeowner for two reasons:
- You can release equity a lot sooner than if you continued to pay your current interest rate.
- You can maximise your return on investment should you decide to sell the property.
3. Equity Release For Financing Your Needs
The sharper your interest rate, the lower your overall loan balance and the more equity you have available for release.
This opens up a world of property investment opportunities because you can use that equity as a property deposit.
You can even:
- Apply for a renovation home loan to fund the costs of renovations.
- Fund the purchase of vacant land for future construction.
- Cash out, depending on the amount and purpose, such as going on a holiday or purchasing a family car.
4. Consolidate High-interest Debt Into A Low-interest Home Loan
Debts getting out of hand?
Do something about it now and avoid heartache like signing a Part 9 debt agreement.
You can refinance to consolidate your debts into one cheaper monthly mortgage repayment.
Save thousands and pay off your debts faster than if you were to continue to try and manage multiple payments at once.
You can consolidate many different types of high-interest debt facilities including:
- Credit cards.
- Personal loans.
- Car loans.
- ATO debts.
5. Save Your Property If Your Home Loan Is In Arrears
Major life events such as injury, illness, job loss or the death of a loved one can prevent you from meeting your financial commitments.
Refinancing is a solution that can actually save people from losing their homes if their home loan is in arrears.
Usually, you’ll refinance to a specialist lender (sometimes referred to as a non-conforming lender) for one to two years.
Some specialist lenders do not look at your credit history at all and assess your home loan application based on its merits. The disadvantage is that you may get a higher interest rate but refinancing can save you from paying this higher cost forever.
6. Get Out Of A High-Interest Bad Credit Home Loan
Are you currently paying off a mortgage with a specialist or non-conforming lender?
In as little as 6-12 months, you can refinance back to a major bank or lender at a much sharper interest rate.
The key to refinancing to a standard interest rate is that you have a steady income and have been making your home loan repayments on time, every time since getting your bad credit home loan.
7. Refinancing To Get Potential Tax Benefits
If you refinance to access the equity in your home and use those funds to invest in property, shares or other wealth-building opportunities, you may be able to take advantage of negative gearing and depreciation benefits.
Let’s say you spent $50,000 on renovating your investment property, you may be able to claim depreciation on these costs over the life of the loan.
Please note that it is recommended that you speak to a tax professional to find out exactly how many deductions you will be allowed.
8. Refinancing To Grow Your Business
Choosing refinancing choices doesn’t have to be difficult or time-consuming, no matter where your company is in its life cycle. Working with a dedicated broker can help you acquire the finest refinancing solutions for your business needs.
By applying for a supplementary loan, such as a top-up, you can gain access to available equity. Refinancing could assist you with expanding your business, adding new product lines, purchasing more stock, or even hiring new employees. You can also utilise refinancing as a term extension to ensure that the term is set for a longer duration, allowing the business to continue operating normally.
9. Find A Home Loan That Best Suits You
Most Australian homeowners have the wrong home loan features or have “bells and whistles” that aren’t being used effectively but are still costing them hundreds in bank fees.
By refinancing, you can get the right home loan product that will help you pay off your home loan faster.
You can learn even more about the home loan products and features available to you by refinancing with a mortgage broker.
They’ll provide a guide on:
- Fixed rate home loans.
- Variable rate home loans.
- Split home loan.
- Rate tracker home loans.
- Professional packages.
- Basic home loan packages.
- 100% offset accounts.
- A Line of Credit (LOC).
- Flexible repayments: This allows you to make extra repayments at zero additional cost so you can pay the loan off quicker.
- Repayment holiday: This facility lets you take a break from making repayments if you change jobs or apply for extended leave from work such as taking maternity leave. Certain lenders may also let you make reduced payments instead.
- Loan portability: If you’re moving from one home to another then this feature will allow you to take your loan with you whenever you move without needing to arrange a new loan.
Look For Refinance Cashbacks
Most banks offer a cashback that usually ranges from $1,000 to $5,000 if you refinance with them.
The eligibility criteria differ from bank to bank but are based on your loan amount and maximum LVR.
Note that a bank may change or withdraw its cashback offer at any given time, so it is important to be up to date about offers available in the market while making your refinancing plans.
Refinancing Can Sometimes Go Wrong
While there are several benefits to refinancing, it is also important to be aware of the potential drawbacks.
If you’re not careful, you could wind up with a new loan that’s more expensive than your current one. Another potential drawback is that it can take a long time to recoup the costs of refinancing, such as appraisal and discharge fees.
Also, if you are considering selling your home in the future, refinancing might not be the best option. This is because most refinances reset your loan term back to 30 years.
To learn more about reasons to avoid refinancing and the potential drawbacks of doing so, visit our reasons not to refinance page.
Work With A Mortgage Broker
At Home Loan Experts, we have over 15 years of experience in refinancing home loans for our clients.
Listed below are some of the reasons you should consider refinancing through us.
- We are an award-winning mortgage broking firm with several award-winning mortgage brokers working for us.
- We have more than 50 lenders to choose from, including major banks and specialist lenders.
- Our brokers are specialists in what they do, and refinancing is a niche in which they are well versed.
- Many of our brokers have obtained an elite/flame status with some of the banks, which means their loan files are taken as high priority in terms of the lender’s turnaround time and the service offered.
- So far, we have refinanced over a billion dollars in home loans, helping about 2100 households.
- We have a customer relationship team that helps new refinancing clients while the customer success team helps existing refinance clients.
- We have a team of loan processing specialists who can help you with filling out your discharge form and processing your refinance loan application on your behalf.
- We have received numerous positive client testimonials and google reviews as proof of our excellent customer service.
We can help you refinance to a more competitive rate, unlock your equity, get you the best cashback offers, and help you achieve your financial goals.
Speak with one of our experienced mortgage brokers about the benefits of refinancing. Call 1300 889 743 or fill in our free online enquiry form today.