Refinance Home Loan: Refinance with ScaleMortgage
Refinance home loan: Are you considered saving thousands with a home loan refinance? With interest rates at decade highs, now may be the perfect time to seize some great home loan refinance offers.
Estimated reading time: 6 minutes
Author:
Share:
Refinancing your home loan can potentially save you thousands of dollars over the life of your loan.
What is Refinancing?
Refinancing is the process of replacing your existing home loan with a new one. You can choose to stick with your current lender or consider working with a new one for your loan. The new loan has different terms like interest rates, fees, and loan length, which could save you money over time.
Why Refinance Your Home Loan?
Several variables might prompt you to contemplate the option of refinancing your home loan. These include:
- If interest rates have decreased since you took out your home loan, refinancing could help you secure a lower rate. This could lead to significant savings in the long run. This could potentially result in significant savings for you in the long run.
- If there has been an improvement in your financial circumstances since you obtained your home loan, you could qualify for an improved interest rate or loan condition.
- Refinancing can help you consolidate debt, like credit card debt or personal loans, into your mortgage. This can potentially save you money on interest and simplify your debt repayments.
- If the value of your home has increased since you took out your loan, refinancing allows you to access that equity. You can use this extra money for home improvements or investments.
What Are the Cost to Refinance Home Loan?
While refinancing can save you money in the long run, it’s important to consider the costs involved in the process. These may include:
- Break fees: Lenders may have a break cost if you end your fixed-rate home loan early.
- Settlement fees: These are fees charged by your new lender to cover the costs of setting up your new loan.
- Valuation fees: Your new lender may require a valuation of your property to determine its current value.
- Ongoing fees: Your new loan may come with ongoing fees, such as annual fees or account-keeping fees.
- Government fees: Your state or territory may require you to pay stamp duty on your new loan.
Consider these costs before refinancing to make sure it will save you money.
How Often Can You Refinance Your Home Loan?
No limit exists to how often you can refinance your home loan. Thinking about the costs of refinancing and whether it will help you save money in the future is important. Also important to note that refinancing too frequently can negatively impact your credit score.
Eligibility Criteria for Refinancing
To be eligible for refinancing, you will need to meet certain criteria set by your lender. These may include:
- Loan to value ratio (LVR): This is the amount you owe on your home loan compared to the value of your property. Most lenders require an LVR of 80% or less to refinance.
- You credit score: It measures your creditworthiness and lenders use it to assess your risk as a borrower. Having a good credit score can increase the likelihood of refinancing approval.
- Income: Lenders will check your income and job to make sure you can pay back the new loan.
- Existing loan: Your current home loan must be in good standing, with no missed payments or defaults.
How to Refinance Your Home Loan
If you think refinancing is the right next step for you, here’s how to get started:
1. Research Your Options
Start by researching different lenders and their home loan products. Look at interest rates, fees and charges, and loan features to find the best option for you.
2. Check Your Credit Score
Before applying, check your credit score to ensure that it is in good standing. If it’s not, take steps to improve it before applying.
3. Gather Your Documents
You must give paperwork to your new lender, like proof of income, job, and details about your current home loan
4. Apply for Refinancing
Once you’ve chosen a lender, you can submit your loan application for refinancing. This can usually be accomplished either virtually or face-to-face.
5. Wait for Approval
Your new lender will assess your application and determine whether you are eligible. This process can take a few weeks, so be patient.
6. Settle Your New Loan
If we approve your application, you will need to sign the new loan documents and pay any applicable fees. Your new lender will then pay off your existing loan and your new loan will begin.
Refinance Investment Home Loan
If you have an investment property, you may also consider getting a better interest rate on your investment loan. Here are some extra factors to think about:
- Interest rates for investment home loans are usually higher than for owner-occupied home loans. It’s important to compare rates to get the best deal.
- Eligibility criteria: Lenders may have different eligibility criteria for investment home loans, so it’s important to check with your chosen lender before applying.
- Tax implications: Before refinancing your investment home loan, consult a financial advisor to understand potential tax consequences.
Refinance Home Loan with Bad Credit
Even if your credit score is less than ideal, there is still a possibility for you to get a better deal on your loan. However, your options may be limited, and you may not be eligible for the most competitive interest rates. Research thoroughly and compare lenders to find the best option for your situation.
Home Loan Cashback Offers
Some lenders may offer cashback incentives as well as competitive loan rates. These offers can range from a few hundred dollars to thousands of dollars, so it’s worth considering when comparing lenders.
Taking into account the interest rates and fees associated with the loan is crucial. This will help ensure that it will be financially beneficial for you in the future. Make sure to carefully evaluate these factors before making a decision. This will help you make a more informed choice about the loan.
Refinance Home Loan Calculator
To determine whether refinancing your home loan will save you money, you can use a refinancing calculator. This tool calculates how much money you could save by refinancing your loan. It considers your current loan information, proposed new loan details, and any related costs.
Home Loan Refinance Takeaways
Refinancing your home loan can potentially save you thousands of dollars over the life of your loan. Consider the expenses and whether it will aid in future savings. Research your options, check your credit score, and compare lenders to decide if refinancing is right for you.
External Resources
Internal Resources
Thomas Makin
Thomas Makin is the Principal Mortgage Broker and Co-Founder of Scale Mortgage. Holding a Diploma in Finance and Mortgage Broking Management, he is also an accredited member of the Mortgage & Finance Association of Australia (MFAA). Thomas is recognized for his expertise in guiding homebuyers and investors with tailored mortgage solutions across Australia, demonstrating a commitment to professionalism and high industry standards.