Refinancing your mortgage gives you an opportunity to reassess the features of your home loan that you may or may not need and may be paying for. A home loan refinance also allows you to consider aspects such as guarantee or cross collateralisation which possibly due to tight settlement deadlines in the original finance may have been forced upon you.
However some lenders now offer “Fast” or “Rapid” refinance and they have a good reason for doing so as all of the delays mean you have an extended period in which you may change your mind and that means that all the work your broker/new lender has done is wasted. With a Fast Refinance the new lender doesn’t wait for the old lender to come to get their act together, the new lender simply makes a payment on the old mortgage and it is paid out. The lenders do this with a product called “Title Insurance” which comes at a cost although some lenders are absorbing that cost in order to reduce the risk of losing the deal.
There are many good reasons to consider a home loan refinance and not only to get a better deal – you may want to upsize or downsize your home with the view to renting out your original home – if so this does require special consideration and possibly professional tax advice. But before you pick up your phone for your accountant, why not call us first, we won’t try and give you tax advice but we can tell you whether you might need it and we don’t charge for your calls.
Unfortunately many lenders have a habit of offering better interest rate discounts to new home loan customers. Therefore to get the best deal you may have to become a new customer with a different lender. However that doesn’t mean that you should refinance every time you find a better deal – after all there are costs in time and money, each application shows on your credit report and with some lenders currently making a grab for market share there is no guarantee that the lender you switch to today will still be competitive next month – but with our years of experience we know their track records.
There are many factors that can influence your decision and there may be barriers. So the first thing we, as your mortgage broker will do is to assess whether you are really in a position to make a cost effective move to another lender. Please keep in mind that we don’t charge you for our services as lenders pay us a commission and so we only get paid for loans that actually settle. So it simply is not in your interest or our interest to waste time on applications that are not going to succeed. However we also have an obligation under national consumer credit laws to only arrange a refinance for you if the new loan is ‘not unsuitable’ ( ASIC’s words not ours ). If you want more information on the process we have prepared a fairly detailed description here.
So if you are simply feeling that you could be doing better with your current home loan, then you probably can and you should contact your mortgage broker to give your home loan mortgage a free check-up. If it’s not in your interest to refinance your home loan, we will tell you straight up. Many of our current clients came back to us because they received honest advice in the first place.