Refinancing simply means to switch from one lender to another. Switching lenders can provide you with a loan that better suits your current needs which could save you money (isn’t that what we all aim for).
The loan you currently have may have been perfect when it was first established. However, just like all things in life, your mortgage needs may change over the life of the loan.
Switching can also provide a means of accessing home equity, which can provide low cost funding for home improvements, investing or other personal goals such as going on a holiday. It may also allow you to consolidate debts and reduce some financial stress.
However refinancing isn’t a breeze. There will be paperwork to provide, forms to sign and a valuation to be conducted. However, for this slight inconvenience, the benefits can be great.
On the plus side, Capital Funding Group can help to ease the process for you and will help you decide if refinancing could work for you. So even if you’re comfortable with your current home loan, it’s worth knowing how refinancing works and reviewing your situation.
Competitive market puts borrowers in the driver’s seat
What is the main reason people refinance? The answer is to secure a cheaper loan. There is currently a lot of competition between lenders at present. All of the lenders out there (both big and small) want to increase their market share so offer special deals to attract new customers.
As a guide to the savings refinancing can help you achieve, switching from a $300,000 loan with a rate of 6.4% to a loan with a rate of 5.9% could cut $92 from your monthly repayments. That’s an overall savings of up to $27,692 over a 25 year term.
Costs are associated with refinancing which is why it is best to have Capital Funding Group review your loan and do a cost comparison for you between your current loan and new options. Even though exit fees no longer apply, if your loan is more than 2 years old there may be fees still attached.
Some other fees you may face are a Discharge Administration Fee from your current lender (ranges between $295 and $500 on average). Capital funding Group can provide these figures for you when reviewing your loan options.
You may also be up for Mortgage Registration fees – usually about $200, which are payable to your state or territory government.
Lender’s Mortgage Insurance may be payable if you are borrowing over 80%. Most lenders will allow you to add this to the loan balance so this fee does not need to be paid upfront. At Capital Funding Group we will factor this in to the overall cost when assessing your refinance options (we may find you are better to stay where you are).
Before we start any refinance process, Capital Funding Group always compares your current loan with the potential new lenders and ensures you are going to come out ahead financially.
Take advantage of improved features
If you have a mortgage that has been established for some years, new features may now be available that would benefit you greatly. These may include redraw features, offset, debit cards or easy online/smartphone banking. All of these features may make your life easier.
Capital Funding Group can take a look at a range of home loans from the lenders on their panel to see if there’s a more suitable loan out there for you. A better deal could be just around the corner. Contact Us
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