MAINTAINING A HOME
When is the best time to consider refinancing your home loan?
26 August 2020
There are many reasons to refinance your home loan. You might be ready to renovate or consolidate your debt, or maybe you’re looking for a better deal after coming out of a fixed-term period. Whatever the reason, refinancing your home loan could help provide you with a little extra financial support.
What does refinancing your home loan mean?
When you refinance your home loan, you’ll take out a new mortgage to repay your existing one. You might do this with a new lender, but you may also be able to do it with your existing loan provider.
What are the potential benefits of refinancing your home loan?
In addition to potential benefits such as a more competitive interest rate and the convenience of debt consolidation, refinancing your home loan could provide you with more equity for investments or renovations. In other words, by shifting to a different loan structure, you might be able to access funds based on the equity you’ve built up in your existing property.
Choosing to renovate your home or purchase an investment property or business can help to support your financial future. That said, these kinds of financial decisions can come with additional costs and risks. Be sure to chat your plans through with a financial planner before committing to them.
When should you consider refinancing your home loan?
The timing will depend on your current personal and financial situation. If it’s something you’re considering, you may find it useful to chat to an expert, such as a financial planner or mortgage broker.
You may want to consider refinancing if:
- A better interest rate is available. If your lender’s interest rate isn’t competitive anymore, it might be time to look elsewhere. Don’t forget to ask your current lender for a better deal to see how the rates compare.
- You want to consolidate your debts. If you’d like to consolidate your personal debts into your mortgage, you’ll only have to manage one repayment. This won’t reduce your debt, but may make it more manageable, and could potentially reduce any admin fees.
- You’ve got a steady job. If you’ve been employed in the same job for 12 months or more, a new lender could see this as an indication of your ability to make repayments. Provided you meet a lender’s eligibility criteria, you may be in a better position to be approved for refinance.
Costs to consider
When you refinance your home loan, there will be additional costs and fees. At the very least, you’ll need to pay discharge fees to your current lender — usually between $150 and $350 — as well as application fees and mortgage registration fees to your new loan provider. There may also be a break fee (sometimes called an early payment fee) if you have a fixed interest rate home loan and switch before the end of the fixed term.
If it’s the right decision for you, brush up on the additional costs, because they may influence when you’ll be able to start the refinancing process. Understand more about the costs of refinancing.
Seek financial hardship support if you need it
If you’re having a tough time meeting your loan repayments due to financial hardship, let your lender know as soon as you can. They may be able to offer you support by temporarily postponing your loan repayments or extending the term of your loan to reduce the amount of your loan repayments. Just be aware these arrangements may require you to pay more interest over the loan term.
If you’re a Suncorp Bank customer experiencing financial difficulty, we might be able to help. Call us today on 1800 225 223 from 8:30am-5:00pm AEST Monday to Friday or email us on firstname.lastname@example.org. By letting us know about your situation, we may be able to support you.
- How to successfully refinance your home loan
- What’s the difference: Refinancing or applying for a new mortgage?
- How much does it cost to refinance a home loan?
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