Refinancing your mortgage can be a powerful strategy, allowing you to save money, lower your monthly repayments, or adjust your loan term to better suit your personal needs. It can help you take advantage of better rates and improve your cash flow.

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What is Refinancing?

Refinancing is the process of transferring your existing mortgage to another lender or renegotiating the terms with your current lender. There are various reasons people choose to refinance, and these often include:

·       Current rate is too high.

·       A current fixed rate period is coming to an end.

·       Dissatisfaction with a current lender’s offering.

·       Current lender is not meeting other requirements: customer service, poor user         experience, no branch access, poor online functions etc.

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How Does Refinancing Work?

So, what is the refinancing process? Initially, we would attempt to re-price your rate with your existing lender. If they are unable to provide a competitive offer, we would commence the product comparison stage and recommend three to five alternative lender options, calculating potential savings and benefits. As this is still a full finance application, once a new lender is selected we will review full financial position and organise a valuation on your property and lodge a finance application.

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Does Refinancing Vary from Lender to Lender?

Refinancing terms, rates, and processes can vary between lenders. Some lenders may offer a lower interest rate with higher fees, while others may have more flexible repayment options. Depending on a lender’s policies, valuation process and approval timelines may vary from lender to lender.

Downsides of Refinancing

While refinancing is an effective strategy you must consider a variety of different factors, and it will be different for every personal circumstances. There are costs involved, typically, discharge fees from your existing lender, application fees, government costs, and mortgage registration costs. If you extend your loan maturity date, you may incur a huge increase of interest payable over the life of the loan. Refinancing can be a good opportunity to review your financial positive and assess whether you require any additional funds.

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Examples

For example, a client approached us with frustrations about their current lender’s poor internet banking services, making it difficult to manage their mortgage and finances. They were looking to refinance with a lender that offered better internet banking features, making it easier to manage.

In reviewing their situation, we not only identified a lender with effective, easy-to-use internet banking services, but we also found an opportunity to save the client thousands of dollars by securing a lower interest rate. This significantly reduced their monthly mortgage repayments, resulting in increased long-term savings.

Additionally, we helped the client set up offset accounts that were strategically designed to meet their cash flow requirements. This also benefited the client as when we value their property for refinancing, we could also look at an investment strategy as well based on the valuation and equity available.  

Through refinancing, the client not only resolved their initial online banking concerns, but also gained financial benefits.

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