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Is It Time to Refinance Your Home Loan?

Refinancing can help you save thousands of dollars, minimise monthly repayments, and help you achieve long and short-term financial goals. However, when you decide to refinance your home loan, you should consider a few things. In this blog, we’ll explore various aspects of refinancing and a few things that you should consider to make informed decisions and increase the benefits.

Home Loan Refinancing

Refinancing means taking a new loan to replace your old one. Typically, a homeowner can get additional benefits with a home loan refinancing option, like a lower interest rate or a more competitive repayment plan.

How Does Refinance Home Loan Work?

Refinancing allows you to choose different home loan products from your old one. While you can get a new loan from your existing lender, it is common to refinance a home loan with a different lender. There are various reasons to refinance your home loan that we will discuss in this blog.

Why Refinance a Home Loan?

When you think of switching home loans, there could be various reasons:

  • Access Better Home Loan Deal

Lenders offer competitive interest rates and lower fees, more flexibility and better loan features. You can access better home loan deals if you decide to refinance your home loan.

  • Fixed Rate Term is Ending

If your fixed rate is nearing its end and you don’t want to automatically roll onto your lender’s standard variable rate, then it is the right time to refinance your home loan.

  • Switch to a Different Type of Loan

Many of you may be looking to switch to a fixed rate or from a fixed to a variable rate. Or from interest only to principal and interest repayments (or vice versa).

  • Debt Consolidation

Home loan refinance could allow you to roll other debts into your mortgage. It means you will have a lower rate on those debts.

How to Get the Best Deal with Home Loan Refinancing?

When you decide to refinance your home loan, you may have to consider a few things. Here are a few steps that you need to follow to access the best deal by refinancing your home loan:

  • Increase Your Property Valuation

When you refinance your home loan, then property valuation matters a lot. It is a part of the refinancing process so a lender will have your property valued. The highest valuation means you will be eligible to refinance your home loan at a lower interest rate.

  • Compare Rates

If you get a lower interest rate on your home loan by home loan refinancing, then you could save money. Therefore, it is important to compare rates to get an idea of the overall cost of the loan per year, including fees and interest.

  • Check the Loan Term

Make sure to check the loan term. Some lenders may suggest sticking to a 30-year loan term. However, you may want the same loan term or short loan term if you can afford to pay high repayments. If you refinance to a lower interest rate, but you keep your regular repayment at the same level as our previous loan, your loan term will be shorter under the new loan.

Are You Eligible to Refinance Your Home Loan?

To check your eligibility, the lender will first check your home loan application. If your situation has changed (your income, credit score, other debts, etc.), then it will be considered. It means if you have records of repaying your old loan consistently, then you will likely be eligible for home loan refinancing. Here, your property valuation also matters.

How Often Should You Refinance Your Home Loan?

It is based on your overall financial conditions and objectives. If it is your family home and you are not looking to move any time soon, then refinancing would be the best option. If you are on a variable rate, then you can refinance your home loan at any time, which makes sense when you choose to refinance an investment property, and you want your home equity to grow your portfolio.

Conclusion

If you are looking to refinance your home loan, then you can reach Star Homeloans. We are always ready to help you by providing you with the right options that would match your circumstances.

Other Useful links:-

First Home Buyers Grant Melbourne

Personal Loan Broker

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