REFINANCING LOAN ADVICE FOR AUSTRALIAN BORROWERS
Information, money saving tips and independent commentary on Refinancing Home Loans

Refinancing a Home Loan

What is Refinancing?

Refinancing allows borrowers to obtain a loan better suited to their current circumstances. The rapid increase in homeowners equity due to rising property values in Australia has resulted in a surge of people investigating mortgage refinance options. As many as 33% of all loan applications are by people looking to refinance.

Refinancing can be expensive and time consuming due to the amount of red tape involved. Redrawing on an existing loan is much simpler and less expensive, but isn't always an option.



It is extremely important to consider why you want to refinance. Funds that are used to purchase or improve assets are likely to be a good investment. Funds that are used for liabilities like cars, boats, swimming pools or holidays can leave you worse off than you were previously, and financing new business ventures has been a disaster for many people.

Be sure to find out what your existing loan(s) is costing you and compare that with whatever refinancing you are offered. Also compare features of the new and old loans and factor in changeover costs.


REFINANCE INVESTMENT PROPERTY
Std Variable Rate Loan
Basic Variable Rate Loan
Fixed Interest Loan
Split Loan
Home Equity Loan
Debt Consolidation Loan
Low Doc Loan
Non-conforming Loan
Line of Credit
Interest Only Loan
Reverse Mortgage
Construction Loan
Renovation Loan
Refinancing
Mortgage Broker
Home Loan Resources
The best place to start your home loan search

Why Refinance?

Most borrowers refinance to -
  • get a cheaper home loan rate
  • roll debts into a single loan to lower repayments
  • renovate their home (bathroom, kitchen etc)
  • switch from a variable loan to a fixed rate loan when rates are rising
  • switch from a fixed loan to a variable loan when interest rates are falling
  • obtain cash for a major purchase (car, holiday etc)

Costs of Refinancing

The various fees and costs associated with refinancing can easily add up to thousands of dollars. For some borrowers the benefits and savings outway the costs but, for others it does not make financial sense. Be sure to do a costing of your current and proposed situations.

Costs that need to be factored in include -
  • Early repayment charges on your existing loan
  • Lenders application and settlement fees
  • Lenders mortgage insurance
  • Property valuation
  • Existing Mortgage discharge fees
  • New mortgage registration
  • Stamp duty in some States

Tips and strategies

Lenders Mortgage Insurance is only required if you borrow more than 80% of your home value so you can save yourself a large sum of money by keeping your borrowing under 80% of valuation.

With debt consolidation loans, pay off the maximum you can afford each month otherwise that car you were paying off over 5 years will cost a fortune when paid off over 20 years.

Making weekly or fortnightly repayments pays your loan off faster than monthly payments because you are making 1 or 2 extra repayments per year

Have your wages paid into your loan account to reduce interest and use the interest-free period on a credit card for purchases before paying the credit card bill from the loan account

If your loan allows it, put lump sum payments like tax refunds into your loan account and if required later, use the redraw facility.

Example Refinance Mortgage Rates and Fees

Variable Rate Home Loan NO FEES (June 2016):
  • Monthly fee NIL
  • Annual fee NIL
  • Redraw fee NIL
  • Extra Payment fee NIL
  • Fixing fee NIL
Low Rate 4.97% std. variable
CCR 5.02%*
*Based on $250,000 Loan over 25 years.

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