Refinancing Your Home Loan
Everyone’s financial goals and situations change over time. Market conditions can change severely over a few years, and you must adjust accordingly.
Say you’re halfway through a 30-year loan term. Chances are you’re in a different financial situation than when you locked in your existing loan rate.
In those cases, it’s best to re-evaluate your home loan to access better deals, interest discounts, or additional features to help save you more money.
Comparing different home loans is a great way to secure lower rates. But not everyone has the time and money to hop around several banks and lenders to inquire about interest rates.
Whether you want to consolidate multiple loans, free up equity, or look for a better lender, refinancing with Mortgage Pros will help you save time and money.
Loan Refinancing in a Nutshell
Loan refinancing is when the borrower takes out a new loan to pay off an outstanding loan, typically with a lower interest rate and more convenient loan terms. The main objective of refinancing a loan is to save short- and long-term money by opting for more favourable terms that fit your current financial position.
When you apply and get approved for a loan refinance, you will use the funds you acquire from the new loan to pay off the old loan.
You will largely benefit from loan refinancing if your new loan has shorter repayment terms, lower interest rates, and more convenient features than the old mortgage. But we always recommend evaluating the overall costs and seeing if loan refinancing suits your needs.
That’s because some banks and lenders will charge steep penalties for paying off a loan early.
Why Should I Refinance My Home Loan?
Refinancing your home loan unlocks the following benefits as a borrower:
Leverage lower interest rates
Depending on your current borrowing power and financial situation, you may get approved for lower interest rates. If you can make larger monthly repayments, we may leverage that to negotiate lower rates to refinance your old loan.
Uncover better lending options
Mortgage Pros have more than 40 different banks and lenders to compare rates and loan features. Let us comb through different loans and present you with the best refinancing options to suit your financial needs.
Get better loan flexibility
Our mortgage specialists at Mortgage Pros know which add-on features will significantly improve your loan terms. For example, a redraw facility gives you access to the extra money you’ve paid throughout your home loan.
That means if you have an extra $1,500 paid to your home loan over a year, having a redraw facility lets you withdraw that amount if you need it in the future.
If your current lender doesn’t have this facility, we will help you refinance to a bank or lender that does.
Consolidate multiple loans into a single mortgage
Loan consolidation can make multiple debts easier to manage. If you’re juggling payments for your credit card, personal loan, and car loan, you can refinance to pay off existing debts.
Note that debt consolidation doesn’t eliminate the debt. It only makes it more manageable and easier to pay by reducing the number of loan payments. But with our help, you can also secure lower interest rates if you combine multiple debts into one loan.
Frequently Asked Questions
Here are some common questions about loan refinancing from our clients at Mortgage Pros.
Is refinancing common in Australia?
PEXA, Australia’s digital property settlement program, reported a record-high refinance index of 187 points on August 2021. That’s a 46.9% YOY increase and 87% higher from October 2018.
Moreover, industry reports indicate that more than 300,000 Aussies refinanced during 2021, around 10% higher than the previous year. These data indicate that Australians try to get the most out of their mortgage, and refinancing is among the proven methods.
How long will I get approved to refinance my home loan?
From our experience working with hundreds of customers, refinancing a home loan may take around 4-8 weeks, depending on your financial circumstances and borrowing power.
If you refinance with the same bank or lender, expect faster loan approval since they should already have all of your payment history and documents. But the process will take longer if you want to pick a new and better lender since you must submit all required documents to evaluate your application.
At Mortgage Pros, we’ll assess your refinancing options across several lenders and provide an accurate timeframe depending on the lender and whether you have all documents ready.
Some banks will process faster than others—yet our years of experience across 40+ lenders will provide you with data-driven timeframes so you can plan your finances ahead.
Are there usage limitations on refinancing funds?
Taking out a new mortgage may incur unique terms and conditions than your old loan. Your refinance lender may pose restrictions on how or where you can use the money.
Will my credit score decrease when refinancing?
Refinancing can potentially affect your credit score. But it will depend on your reason for refinancing and your actions during the application.
Every lender you visit will check your credit score in a hard enquiry when looking for a new home loan in Australia. Having several hard enquiries in a short span harms your credit score and will make it harder to land appealing loan rates.
In other words, the more you ask around, the more hard enquiries will reflect on your credit report and the lower your credit score will become.
Our mortgage specialists at Mortgage Pros can present you with a list of potential lending options so you don’t have to shop for refinance options yourself. Partnering with a specialist mortgage broker will minimise hard enquiries under your credit report while giving you more insightful data on different lenders and loan options.
With our help, you can get better interest rates through refinancing, improve your credit score, and make debt repayments easier.
Are there other benefits when partnering with a mortgage broker?
Refinancing with a mortgage broker is just as beneficial as taking your first loan with Mortgage Pros.
Some benefits of having a mortgage broker include the following:
- Guidance and expertise in choosing the right refinance lender
- Negotiate better loan rates and access helpful loan features
- Save time, money, and credit score shopping through different lenders. Let our team do the legwork from selecting lenders, submitting your documents, and negotiating, until following up on your application.
Should I refinance my home loan?
As discussed, it will depend on your financial situation. Refinancing is not for everyone, and if we think we can provide a better long-term deal for you, our brokers at Mortgage Pros will be the first to let you know.
But if we think it’s best that you stay with your current loan and lender, we’ll be honest and tell you immediately.
Our mortgage brokers will assess your current financial situation and provide upfront, industry-leading advice and help you make an informed decision for the long run.
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