Australians flocked to refinancing their home loans in 2020, with around 500,000 people changing their home loans. Australians have taken notice of the record-low interest rates. In the meantime, Aussies have been rushing to modify their loan terms. They’re looking for the best way to lock in a lower interest rate, more flexible loan features, and a more suitable loan structure. Australians are taking advantage of the current market to refinance their home loans.
In this post, FinanceCorp, your trusted company for mortgage refinancing in Perth, shares the steps you need to do to ensure you’re prepared for the change in your home loan:
Step #1: Think About Your Reason for Refinancing
Before you decide to refinance your mortgage, you first need to look in the mirror and ask yourself your reasons for choosing to refinance. Think about what your real motivation is for refinancing. Then, write it down on a piece of paper and keep it in a safe place. You can look at it later on to decide if you want to take the risk of refinancing your home loan. It would help if you were sure that you were doing this for the right reasons. Refinancing is a big decision, and it will take some time.
Step #2: Be Prepared to Lose Some Part of Your Loan
You’ve got to get your head around the fact that you’re going to lose some money when you refinance your home loan. You’re not maximizing your interest rate, and there will be costs involved when you refinance your home loan. The banks are charging you fees, and you’re going to lose some money. If you’re not prepared to lose some money, you should not refinance your home loan.
Step #3: Compare Refinance Options
You need to understand that not all home loans are equal. You can get a better interest rate, but it’s not always the case that you’re going to be able to get a better loan term. You may find that you can save more money if you keep the same loan features. If you’re not sure what you should do, you should compare the options. You can read more on this topic here.
Step #4: Be Prepared for Potential Financial Risk
You must consider the financial risk when you refinance your loan. What happens if you lose your job? What if you are unable to make your monthly payments? What happens if you lose your home? Think about these things before you refinance your home loan. If you’re unsure, you can read more on this topic here.
Step #5: Be Able to Afford the Refinanced Loan
Before you refinance your home loan, you need to understand that it’s going to cost you more money. You’re going to have to have a plan for how you’ll be able to afford the refinanced loan. The bank will calculate your loan-to-value ratio and determine whether or not you’re able to afford the refinance. If you’re unsure, you can read more on this topic here.
Step #6: Review the Process of Refinancing
There’s a process to refinance your home loan, and you need to be clear about the process. If you can’t do the process, you shouldn’t refinance your home loan. If you can afford the home loan and you want to refinance your home loan, you should be ready to follow the process and not get lost in the process. Read more on this topic here.
Step #7: Have a Plan to Pay the Refinanced Loan
You need to have a plan to pay back the refinance loan. You don’t want to over-extend yourself, and you don’t want to take on too much debt. You should be able to pay back the loan with your regular income. If you can’t, you should ask yourself if you should refinance your home loan.
Conclusion
Refinancing your home loan is a big decision, and it’s essential to make sure that you’re making the right decision. You need to have a good reason for refinancing. You need to be prepared to lose some money and be fully ready to pay back your refinance loan. Aussie homeowners are rushing to refinance their home loans at record-low interest rates. If you’re looking to refinance your home loan, you should be prepared to spend some time and energy to ensure that your refinance loan process goes smoothly.
For mortgage refinancing in Perth, you should contact FinanceCorp. All of the Finance Managers at FinanceCorp are fully qualified, trained, and experienced mortgage professionals who live and breathe finance. We can help you find the best loan terms for your financial situation. Contact us today to learn more!