Over time, your home loan may no longer give you the financial needs you are aiming for. Because of this, you may want to have the features of your loan changed. But sometimes, lenders do not have that option, and you will have to fully pay off your loan.
However, this does not mean you are hopeless. Instead, there is another way to change your loan features, and that is through refinancing it.
What Is Loan Refinancing?
When you refinance your home loan, you will get a new loan to pay off the old one. With this new loan, the features of your loan will change and this would mean you can get the financial needs that you are aiming for. You can try to get a lower interest rate or even a shorter loan term.
What Are the Benefits of Refinancing?
The most obvious benefit of refinancing is that it allows you to change the features of your loan. If you want to get a new loan, there is a chance that you will be getting a better interest rate. This means you will be able to save more money on your monthly loan installments.
Just remember that the loan refinancing process can be long and tedious. That is why you need to make sure that you can endure it, especially if you are going to spend most of your time in applying for refinancing.
Refinancing is also beneficial if you find your existing monthly repayments too high and you are at potential risk of failing behind on your home loan payments. Getting a new loan and paying off the old one will allow you the opportunity of extending your loan term compared to before because you will have a new loan that would offer a due date farther from the previous one.
What Documents Do You Need to Present When Refinancing?
Refinancing is basically applying for a new loan but telling the new lender that your aim is to refinance. The following requirements are needed when refinancing:
1. Proof of Income
Your lender will need proof that you can pay off the loan. This can come in the form of a recent payslip, bank statement, tax returns or any other documentation you can prove your certain income. For self-employed individuals, the documents will be slightly different, and it is usually two years of business and tax returns.
2. Paperwork on Previous Loan and List of Expenses
Aside from your proof of income, your capacity to pay will also depend on your spending. They may request paperwork on the previous loan that you are trying to refinance and on other loans. They may also request a list of your other expenses, such as bills, insurance and more.
3. Current Assets
Lenders will also request to see what assets you have in cash, properties, vehicles, art and more. These assets will show a higher net worth and can even act as an option available to you if funds are needed to pay your loan.
As a homeowner, you may want to consider refinancing your home loan. Although it does not guarantee that you will get a lower rate, it does offer other financial benefits that can change your loan’s features.
If you are looking to refinance your home loan in Australia, you will need to work with mortgage professionals. At Wealthy You, we offer a variety of mortgage solutions to meet your specific financial needs without having to go through a tedious process. Contact us to learn more.