02 March 2016 Ready to refinance your home loan Gone are the days where home buyers stayed with their original lender for the duration of their home loan. The market is just too competitive. Many borrowers now shop around for lower repayments, a lower interest rate, a loan with more flexible options or just plain better service. There can be many benefits to refinancing your home loan, but it’s important to look at your situation carefully and to clearly compare possible benefits and disadvantages. Typical reasons for refinancing Times change: so might your home loan needs. This is why your existing loan may no longer be the one that’s best for you. Alternatively, you may want to consolidate other debts (like credit card balances, car finance or personal loans) by borrowing against the equity in your property. Loans secured against property generally charge lower interest rates than unsecured debts so you can reduce the total monthly repayments, however a loan secured by property is usually over a longer term, meaning more interest is paid over the term. If you previously paid a higher interest rate through not meeting normal lending criteria, your situation may now have changed and you could save interest by switching to a standard home loan. Or, you may not be happy with the service or loan access options you’re currently receiving. Rate competitiveness and fees are another major factor. You may be able to get a more competitive deal from another lender. What will refinancing cost? Ask your present lender what charges are associated with terminating your loan contract (including break costs if you are currently on a fixed interest rate). What will a new lender charge to establish your home loan? Typical costs include a valuation of your property plus loan settlement costs. And if you want to borrow more than 80% of your property’s value, you’ll need to pay Lender’s Mortgage Insurance. This could be considerable so again, be sure to check with the intended lender. Who offers the best deal? If you’re happy with your present lender’s service, discuss your home loan needs with them first; they may be able to help with a ‘readjustment’, which could eliminate discharge and establishment fees. For information about other lenders, search online, peruse home finance magazines, newspapers or phone and visit potential lenders directly. What about the paperwork? Refinancing your home loan does involve some time and effort to ensure you get a loan that suits your current needs and at the lowest possible cost. You’ll need to get your supporting documentation together, to confirm your income, your repayment history, property details and so on. An organised approach will make the whole process much easier. Like to know more? Before deciding to refinance you should consult a lending professional to help you decide whether it’s the best approach for you right now. See how RAMS helps with refinancing.