All Topics / General Property / Best Time to Refinance Your Mortgage

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  • nfinity financials
    Join Date: 2021
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    Refinancing your mortgage can be complicated. It’s not always straightforward. Deciding whether to refinance or keep your current loan requires research, advice, and comparison. The right time to refinance depends on your situation. Before you decide, make sure to:

    Look at your current financial situation
    Use a refinance calculator to compare options
    Understand the pros and cons of refinancing
    Learn the steps and fees involved

    When Do Most Homeowners Decide to Refinance?
    Most people refinance to get a lower interest rate with another lender. Other reasons include when their fixed-rate term is ending or every 3 to 4 years, even with a variable rate. By then, their loan balance might be lower and property value higher, making it a good time to look for better rates or flexible options. Some refinance if their lender won’t release equity for buying an investment property or for debt consolidation to combine debts into a home loan at a lower interest rate.

    How to Know if You Are Eligible to Refinance
    Owe less than 80% of property value: Your mortgage should be less than 80% of your property’s value to avoid paying Lenders’ Mortgage Insurance (LMI).
    Variable rate: You can refinance every 6 months, but each application will add an inquiry to your credit file.
    Refinance from low doc to full doc: If you had a low doc mortgage but now have enough income evidence, you might qualify for a standard home loan with a better interest rate.
    Refinance out of a bad credit loan: If your Loan-to-Value Ratio (LVR) is 80% or less and your credit has improved, you can refinance a bad credit home loan back to a major lender.
    Refinance Your Home Loan in Easy Steps
    Understand the Situation: Refinancing can be challenging. Check out our refinance guide to help you get closer to paying off your loan faster and for less money.
    Know Your Savings: Contact our mortgage experts to see how much money and time you could save by refinancing.
    Apply for a Refinance: Schedule an appointment with a Home Loan Experts mortgage broker by calling 1300 GET LOAN or book a consultation. We’ll help you choose the best loan and handle all the details for you.
    How Frequently Should I Refinance My Home Loan?
    It depends on your financial situation and goals. If it’s your family home and you’re not planning to move, consider refinancing at the end of your fixed term. If you have a variable rate, you can refinance anytime. This is useful for investment properties when you want to access equity to grow your portfolio.

    Does It Make Sense to Refinance During a Fixed Term?
    Yes, you can refinance during your fixed term, but you might have to pay break costs. If you can recoup these costs within two years, it might be worth it. Use the refinancing calculator to compare costs and savings. Talking with an experienced mortgage broker can help you fully assess your financial situation.

    Alternatives to Refinancing
    Refinancing can be costly and time-consuming. Here are some alternatives:

    Negotiate with Your Bank: Call your lender to see if you can get a lower interest rate or fix your repayments.
    Extend Your Loan Term: Consider extending your loan term to reduce repayments.
    Switch to Interest-Only Repayments: This can temporarily reduce your repayments, freeing up cash flow.
    Keep in mind these should be considered short-term solutions as they can make your mortgage more expensive in the long run.

    Not Sure When is the Right Time to Refinance?
    Our refinance checklist will help you gather all necessary documents. We can assist you in running the numbers to see if refinancing makes sense for you. Call us at 1300 GET LOAN or book a consultation call to speak with one of our home loan refinance specialists.

    Frequently Asked Refinancing Questions
    When should I consider refinancing?

    When interest rates are falling
    Your home’s market value has increased
    You want to renovate or invest
    What documents are required?

    Recent pay slips
    Tax assessment notice
    Pay confirmation letter
    ID documents (driver’s license, passport)
    Financial and credit documents
    How long does the process take?
    Usually, it takes between two and four weeks.

    Does refinancing affect the credit rating?
    Yes, refinancing is seen as a credit application and can lower your credit score if done often.

    What are the costs to refinance?
    You might need to pay break fees, application fees, and closing costs.

    How frequently can I refinance?
    There’s no rule, but some lenders might want you to wait a few months after closing on a loan or after refinancing.

    Is refinancing and topping up your loan the same thing? Refinancing means switching to a new loan, while a loan top-up means increasing your existing loan.

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