Need to refinance your home loan because the loan term has ended, or because you think there are better loan features out there? Finty is your one-stop-shop for loan refinancing advice and comparing available deals.
By Yvonne Taylor | Updated 18th March 2020
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A refinancing home loan is a second or subsequent loan on a property, taken out because the first loan term is about to expire or because the loan agreement will be voluntarily terminated before expiry. A common reason for borrowers to seek refinancing is because one or more features of their current loan – such as the interest rate, loan amount, fees, or other features – may no longer suit them. Put simply, it’s a way of switching your home loan to another lender, or in some cases renegotiating with your current lender, to get a better deal.
Yes. This is another common reason for refinancing. You may have reduced your loan principal as a result of the repayments you have made over several years. At the same time your home may have increased in value as a result of a rising property market. If your loan principal has reduced from, say, $400,000 to $370,000, and your home’s value has increased from $500,000 to $615,000, you now have a 40% equity in your home. If you were to refinance with a Loan to Valuation (LVR) ratio of 80%, your refinanced loan principal would be $492,000, your deposit would be $123,000, and you would be able to withdraw $122,000 in cash. You could use that cash for renovations or extensions, or for debt consolidation by paying off debts with a higher interest rate than your home loan, or for any other purpose you chose. But remember that your periodic repayments will now be higher because you have borrowed a larger amount.
Don’t make a rash decision. Take these steps before you decide to jump ship:
When comparing available home loan options with each other and with your current loan, these are the features you need to consider:
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