OM Financials Services|Home Loan Refinancing Experts

An Overview of Home Loan Refinancing: How to Choose the Right Refinancing Lender

If you have a home loan and your repayment capacity and needs have changed over the years or you want the benefits of flexible features introduced in new home loan products, you should refinance your loan. By refinancing the existing home loan to a new loan available at a lower interest rate and better features, you can save thousands of dollars across the loan repayment period. Hiring a proficient mortgage broker will give you comprehensive professional support for mortgage loan refinancing. Still, you should know- What are the key benefits of mortgage loan refinancing? Should you refinance your loan? How should you choose the best refinancing lender? Blog provides experience-based answers to help you decide right like a refinancing expert.   

What Is Loan Refinancing?

Refinance is the process of switching your home loan to a different scheme or moving it to a different product to be mortgaged. You don't need to change lender or bank to refinance necessarily, you can remortgage existing loan to a more beneficial loan product with existing lender/bank also. Mortgage refinancing allows you to replace the existing loan with a new one.

What Are the Benefits of Loan Refinancing? Top Seven Benefits of Mortgage Home Loan Refinancing

The loan refinancing benefits are not just limited to saving hundreds on account of mortgage repayments. By choosing the right mortgage broker, you can achieve your long-term financial goals much earlier. The top seven benefits of home loan refinancing are-

1. Cheaper interest rate and lower monthly repayments.
2. Reduced overall loan amount 
3. Increased equity to investment in property renovation and add financial value to property
4. Faster repayment
5. Choice for debt consolidation in new home loan 
6. Saving your home against existing arrears 
7. Advantage of tax benefits

Should I Refinance My Loan? Four Compelling Reasons to Refinance Your Home Loan

Deciding right about home loan refinancing is a critical decision that needs consideration across different verticals. The prominent home loan refinancing brokers help you from start to finish with an extended scope of their services but it is up to you to decide whether should you refinance your loan or not or when should you refinance your mortgage loan. Here are four compelling reasons to refinance your loan- 

• You need to reduce the monthly repayment amount
• You want to pay off the existing loan faster
• Your improved credit makes you eligible to get a loan at the lower interest rate  
• You want funds to invest by using home equity

How To Choose the Best Refinancing Lender to Repay Faster with Additional Economic Benefits? 

Most people planning to refinance their mortgage loans need the perfect answer to ‘Which is the best company to refinance a mortgage loan?’. You should list your priorities and compare the costs and services of trustworthy lenders. It is good to prepare a data list of interest rates, fees, features, and closing costs of loans being offered by the short-listed lenders. Ask potential lenders to be better informed about the loan product. An online refinance calculator may help you assess the repayment amount as per preferred repayment frequency. Here is a list of nine questions you should essentially ask the mortgage refinancing lenders; analyze the answers of these questions to choose the right refinancing lender-

1. Am I eligible for loan refinancing? Ask your lender about your eligibility for home loan refinancing. Different mortgage lenders have different criteria to refinance a home loan, but typically you’ll need to meet the following criteria- 

• You should have more than 20% equity in your home
• You should be a permanent adult Australian resident 
• You should have an excellent credit score 
• You should have proof of income 

1. What will be loan refinancing benefits for me? Tell your current lender about your planning to switch to a cheaper loan. Low interest rates is the top concerns of borrowers looking for loan refinancing. Ask, if he has any new loan products to serve your interest.   
2. What will be the cost of loan refinancing? Different lenders offer the same refinanced loan at different costs; compare the costs including the upfront costs. 
3. What loan refinancing features are available to me? The flexibility is the most sought feature in loan refinancing. Only a few lenders offer portability in refinanced loans. Some lenders offer a free redraw facility allowing you to make additional repayments to reduce the interest rate charges. Your lender must offer a ‘Revised repayment calendar’; the feature allows you to choose weekly or fortnightly repayment plans.  
4. What will be the interest rate structure? Interest rate structure, fixed or variable, is another key concern of borrowers.
5. Can I consolidate other debts? Loan refinancing allows you to consolidate other loans also; however, not all the lenders offer this facility. 
6. Can I use my home equity? You can use your home equity for loan refinancing if you want to take a higher loan amount. This facility gives you financial support to invest for economic benefits. 
7. How long will the new loan repayment term be? Choosing a loan repayment term is a critical decision; most lenders prefer a long repayment period to get more interest amount. Are you free to repay more than the due to shorten the repayment period?        
8. How much time does loan refinancing take? Different mortgage loan refinancing banks and institutions follow different processes; therefore, time for completing the entire loan refinancing process becomes a vital selection parameter. 

A number of banks and private lenders offer mortgage loan refinancing facilities. What are the top Australian banks offering mortgage loan refinancing? The top banks offering home loan refinancing in Australia are National Australia Bank, Bank Australia, CommBank, HSBC, ANZ, Suncorp Bank, Bendigo Bank, etc. While selecting the bank for loan refinancing, you should consider the service quality and diversity in products. Hiring a mortgage broker, having specialization in mortgage loan refinancing is a good approach to simplify the entire process aimed to maximize refinancing benefits. 

FAQs – Home Loan Refinancing in Australia

Q1. Does refinancing a mortgage loan impact my credit score?  

Ans. Yes, it may impact your credit score. Credit inquiry, conducted by lenders also affects your credit score. 

Q2. How much expensive is it to refinance a mortgage loan?

Ans. Refinancing a mortgage loan may be costly because you pay discharge fees, valuation fees, set-up fees, break fees, and others. In addition, you pay the mortgage broker also as a fee for guiding you across the loan refinancing process. 

Q3. Will I need a deposit again to refinance my mortgage loan?

Ans. Generally, you don't need a new deposit for refinancing your mortgage loan. If your equity value is less than 20% of the property value, you may be asked to pay Lenders Mortgage Insurance (LMI).   

Q4. How much equity is required to refinance a mortgage house loan?

Ans. Most loans having a 95% LVR don’t allow you to borrow more than 95% of the house value. This means you must have at least 5% equity to refinance your mortgage loan. 

Q5. It is good to hire a mortgage broker for loan refinancing? 

Ans. It is advisable to hire a mortgage broker to make loan refinancing easy, faster, and reasonably priced.

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