Refinancing Your Home Loan
As time marches on, situations change. Perhaps you’ve changed jobs? Or there’s a new addition to the family? Maybe you would just like a better rate? Maybe it’s the advent of school fees, or perhaps the kids have flown the coop? Or maybe that leaking shower or tired kitchen has just reached the end of its life.
A shift in circumstances may mean it is time to revisit your home finances. For many, the idea of refinancing a mortgage can be daunting. Fees, fixed versus variable interest rates and monthly charges all need to be considered.
The right refinanced loan could help you pay off your mortgage faster and for less, clear unhealthy debt or help you upgrade and add value your home, all of which are steps in the right direction.
But where to start? We can help you weigh it all up.
Frequently Asked Questions
Did you know that your borrowing capacity can vary by over $200,000 + depending on which lender you use ... Before you start plugging in some numbers into those online calculators, give us a call. Those calculators are very limited and do not take in to account a huge variety of factors that is looked at by the lenders. If you are wondering how much you can borrow
It is your finance managers job to find out everything they can about your financial situation and your goals for the future. Not only does the process help to identify fraudulent application activity, it also ensures that they are serving your best interests.
In most cases a Mortgage broker will be paid by the banks and not charge you for their service.
Yes as your broker we need to ensure that you are eligible to purchase the home that you would like too.
The larger your deposit, the better. Sometimes you can secure a property with just a few hundred dollars’ deposit, but most markets still require at least five to 10 per cent deposit and sometimes 20 per cent.
Ask your Finance Manager if you are eligible for the First Homeowners’ Grant. The answer will depend on the value of the property, whether you are purchasing it with help from your parents, whether and how long you intend to live in the property, whether it is the first property you have purchased and more.
If you don’t have the financial capacity to meet a 20 per cent deposit but still want to avoid LMI, you do have the option of getting a guarantor on your loan. Normally a close relative, such as a parent, guarantors can use the equity in their property to help you secure yours. In some instances, having a guarantor on your loan may mean that you won’t need a deposit at all.
Stamp duty is a charge which is applied by state governments in Australia on transactions relating to the transfer of land or property. It is paid upfront and needs to be budgeted for in addition to your loan deposit. The amount of stamp duty you are required to pay differs in each state, however there are three factors, along with the value of the property, that determine how much stamp duty you will pay.
Yes, and there are two kinds. There’s stamp duty on the mortgage itself and on the property. You may be eligible for a rebate on the second type, so be sure to ask.
Mortgage insurance lowers the risk to the lender of making a loan to you, so you can qualify for a loan that you might not otherwise be able to get. Generally, borrowers that have a deposit of less than 20 percent of the purchase price of the home will need to pay for mortgage insurance.
Most lenders will require you to pay mortgage insurance if you are borrowing more than 80 per cent of the property’s value.
The mortgage industry is a wide, wondrous world with a language all of its own. One of the many acronyms bandied about is ‘LVR’, which stands for ‘loan-to-valuation ratio’. Here’s what it means. In the simplest terms, the LVR is the percentage of the property’s value, as assessed by the lender, that your loan equates to. So, if the property you want to purchase is valued at $500,000, and you need to borrow $400,000 to pay for it, the loan is 80 per cent of the property value, making your LVR 80 per cent
Refinancing a loan can take advantage of lower interest rates to bring down the overall cost of servicing a loan. But it’s not always the right, or the only, option for you.
There are many different factors borrowers need to consider when thinking about refinancing a loan.
The first step is to speak to an expert about your needs and whether you can afford to service a different loan structure.
Yes if you are eligible you can simply dividing your home loan into two or more loans. For example, let's say you have a $200,000 home loan. You could divide your loan into one portion being $150,000 and the other $50,000.
It can protect you against rate fluctuations if you, as per in this example, say fix the $150,000 for three years and keep the other $50,000 portion variable with a 100% offset account.
Strategies like this can give you security in the home loan market whilst at the same time keeping the flexibility of making extra repayments and redraw with the variable portion.
There are a lot of different options with split loans and every situation is different depending on the client’s needs.
The bank said no
Have you applied for a mortgage only to be told NO!? Sometimes it may be an issue with that particular bank's policy. I can sometimes help by finding you a lender who will initially give you a loan and then put in place a strategy to move you across to your preferred lender at a later date.
An offset account is a transaction account that can be linked to your home or investment loan. The credit balance of your transaction account is offset daily against your outstanding loan balance, reducing the interest payable on that loan.
If you apply for a home loan, particularly if the loan is for more than 80 per cent of a property’s value, you’ll more than likely have to prove to lenders that you have a satisfactory amount of savings. This is to demonstrate your ability to funnel a portion of your income into repayments.
Although it can differ, in most cases lenders generally look for consistent additions to savings over a period of at least three months and preferably a year or more. This means that the following are not considered genuine savings:
a cash gift
casino/other gambling winnings
proceeds of the sale of a non-investment asset
government grants and other finance offered as incentives
Thank you so much for all of your hard work organising our mortgages (and driving all the way to our Guildford house – twice) We really appreciate it as it wasn’t the most straight forward for you.
Lucy and Lyndon Nilsson
Our dealings with Bev was a stress free experience. After dealings with another bank that was stressful I would always refer Bev as a broker.
Rebecca guided us through a complex loan application, and was available at all times to any our queries and concerns. Thanks to her diligence and persistence, we are now settled in our new home. We highly recommend Rebecca Little and Finance Corp for all your financial matters. Thanks again Rebecca.
The Gray Family
Always felt like we were in touch and kept in the loop as to where our finance and applications were at. Sharon even answered my phone calls and questions when on Annual Leave, it wasn't a problem for her.
I enjoyed our overall experience and felt very comfortable throughout the entire process.
Bev was always efficient, quick to respond to any questions we had and would take the time to explain things further. She was always friendly, patient and professional and worked hard to find the best mortgage rates for us.
Bev was very helpful and professional in finding and organising a lender for me. Very stress free for myself.
Laura was an absolute pleasure to deal with, and incredibly helpful throughout the whole process of obtaining finance and settlement for our home. I cannot fault her service in any way, and wouldn't hesitate to recommend her to anyone.
Bev was a delight to deal with. Professional, courteous and friendly at all times. I would highly recommend Bev to anyone seeking a loan approval.
Refinancing Your Home Loan
Can I get a mortgage where I pay less than I’m paying now?
With lenders adjusting their rates outside of the reserve bank now is a great time to shop around or check that you have the right loan for your needs. We’re a great starting point. It will depend what interest rate you’re currently paying, what type of home loan you have (e.g. fixed, variable, interest only, line of credit) and what features you want in your loan. We can quickly explain your options.
Can I consolidate credit card or other debts into a home loan?
This is one of the reasons many people refinance. The advantage is that you pay a much lower interest rate on a mortgage than for most other forms of debt – e.g. credit cards, overdraft facilities, personal loans etc. Providing you have sufficient equity in your property, you may be able to consolidate all your debt on a home loan. If you take this option though it is important to make sure you maintain your repayments at their current level or you could end up paying more over a longer period of time. Speak with us today to discuss your personal needs.
How much money can I borrow?
We’re all unique when it comes to our finances and borrowing needs. Get an estimate on how much you could borrow with our clever loan options tool. Chat to us when you’re ready, we can help with calculations based on your circumstances.
How do I choose the loan that’s right for me?
Our guides to loan types and features (links) will help you learn about the main options available. There are hundreds of different home loans available, we can recommend the right loan(s) for you.
How often do I make home loan repayments — weekly, fortnightly or monthly?
Most lenders offer flexible repayment options to suit your pay cycle. Aim for weekly or fortnightly repayments, instead of monthly, as you will make more payments in a year, which will shave dollars and time off your loan.
What fees/costs are involved in switching mortgages?
Penalty fees could apply if you’re paying off your current mortgage early, especially if you’re exiting a fixed home loan. But these may be offset by repayment savings when you switch home loans. We’ll walk you through any fees that will apply in your circumstances.