What is refinancing?
Category : Mortgage Loans , private money lenders
Refinancing lets you change your home loan to suit your new circumstances. Mortgage Choice recommends an annual Home Loan Health Check to assess whether the original home loan you chose is still the most suitable option.
How does refinancing work?
When you take out a new loan, you use some or all of the funds to pay out your existing loan. The new loan often comes from a different lender, but many people refinance with the lender they’ve been using for years. If you move to a new lender, that lender will take care of paying out your existing loan.
If you are unsure whether refinancing is right for your current situation, refer to our refinancing checklist. Check out our latest Refinance Home Loan Infographics too for more details.
What type of things do people refinance for?
Home loan refinancing may be used for different reasons including:
Renovating your home or other home improvements such as a pool.
Paying off your debts such as credit cards by rolling them into your home loan.
Obtaining a cheaper rate, even if it means giving up a few loan features.
To raise cash for a purchase such as a car
You are paying a high interest rate – for example, if you arranged a low-start, rising-rate loan from your home builder.
You want to switch from a variable rate to a fixed rate, perhaps because you can want to reduce the risk of higher repayments.
How will refinancing benefit me?
Refinancing can be a smart way to manage your money. Here are a few reasons why you may want to refinance:
To get a peace of mind with a fixed rate
To obtain a lower interest rate so as to reduce your monthly payments
To gain the flexibility to pay off your loan faster
To consolidate credit cards, personal loans or other debts to reduce your interest rate and monthly repayments
To unlock the equity in your current property to finance a renovation, purchase an investment property or free up some extra cash.