What is refinancing a home loan?
If you are looking to save some money on your home loan, it may be that you have to look for an entirely new one. Refinancing involves moving from your existing loan to a new one, negotiating better loan terms, interest rates and features that suit you.
Before beginning the process, however, it is important you get the full picture of what it means to refinance your home loan.
What is refinancing?
Refinancing, in its most simple of definitions, is the process of exiting your existing mortgage in lieu of a new one. The lender you apply with will use this new loan to pay off your old one, allowing you to move forward with only one mortgage to make payments on.
Most people choose to refinance in order to save money, which is achieved by finding a loan with more preferential monthly repayments and interest rates. However, this is not the only use for a refinanced loan, as accessing equity through refinancing can be incredibly useful to fund projects you wish to undertake.
How to refinance a home loan
Beginning to refinance a home loan is not too different from setting up your first mortgage loan. Refinancing, after all, is just the process of changing from your current mortgage to a new one. A full guide to the refinancing process is available on our website.
When should you refinance?
You can choose to refinance at any moment, as long as you pass the criteria set out by your lender and have a financial sense of security. The best time for you to refinance, however, depends entirely on you and what you intend to do.
Overall, however, good times to refinance are:
- When you have a good credit score, especially from when you first got your existing loan, you can refinance for a better interest rate.
- When interest rates are on the move.
- If you are interested in switching loan types, especially if you are going from a variable to a fixed interest rate, or vice versa.
- When you are looking for a lower term to pay off your mortgage loans faster.
- When you need to access equity for cash out refinance, or to consolidate debt.
- If you want to remove someone’s name from the loan title.
Ultimately however, when you believe yourself prepared to undergo the refinance process is the best time to start. If you are looking to get started with a trusted mortgage lender, Homestar Finance is an award winning lender with plenty of refinance home loan options for a better home loan. Refinance with us today!
Disclaimer: This article is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered Australian legal practitioner or financial or investment advisor.
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