What is mortgage refinancing?
What does it mean to refinance a mortgage? Basically, you take out a new mortgage to repay an existing loan. The new borrowing can be with the same lender for your existing loan, or it can be with a different lender, depending on your needs and purpose to refinance.
Refinancing is a smart way to manage your money. See below for the top reasons that people refinance their mortgages.
Why do people refinance?
The logic behind this is simple. The higher the value of a house, the more you can lend out for a mortgage. Therefore, if your property has grown in value, you could take out a new mortgage of a greater amount at the same leverage rate. After repaying the old loan, you are left with the excess cash. This is equivalent ot unlocking equity in your current property.
- Consolidate your debts
You may have multiple loans with different repayment requirements and timing. A refinancing action makes repayments simpler and can reduce interest rates owing each month.
- Enjoy a lower interest rate
This is probably the most straightforward reason to refinance your mortgage.Some research may be required to find the product with a more attractive rate and also suited to your circumstances and needs.If an optimal product is found，why not get a better deal when market rates fall?
How does it work?
Refinancing usually involves the below steps:
- Check in with current lender
- Compare home loan products and identify ideal new lender
- Apply to refinance
- Provide relevant documentation
- Receive Letter of Offer from new lender and arrange settlement
What should I do now?
The pre-requisite for finding the right refinancing product is to understand your own needs. Consider your current portfolio and why you want to refinance. Also take into account your financial and investment plans for the future.Having known your motives,start researching! There is a multitude of home loan products out there, from different lenders, with different rates and requirements.Lenders’ websites usually contain detailed information caabout their products.
However, locating that right product for refinancing may be a time-consuming process for individuals who do not work in the real estate finance industry. The vast number of available lenders coupled with the information asymmetry between borrowers and lenders make it difficult for ordinary individuals to efficiently find the optimal loan for refinancing.In this case, KBRZ can help you out. As one of Australia’s fastest growing real estate and finance solutions companies, KBRZ has professional backgrond in property sales, loans as well as investment funds. KBRZ has years of experience in mortgage services, allowing the company to establish mature financing channels and customer networks, as well as accreditations with multiple reliable Australian financial institutions.
Feel free to visit our office and have a chat from 9a.m.- 5p.m. Monday to Friday. Or call us at 1300 588 978 and book a free consultation now!