We live in the age of the internet. There is a wealth of information out there. You would think that we would be well-armed with facts about refinancing. However, there are many unscrupulous sources passing off misinformation as facts. One of the most infamous myths is that refinancing automatically means you will have a better financial situation. The truth is much more complicated than that.
If you are a borrower who is considering refinancing your home loan, you should first consider your circumstances before making that decision.
This article aims to dispel some of the myths that surround refinancing.
Lower Rates Are All You Need to Consider
It’s important to remember that while having a low interest rate is good, there are more things to consider than just that. You should also think about the features of the loan organisation you’re switching to. Not only that, but you should check to see how long your low interest rates last. Most of the time, the lower interest rates only last 6 months.
When browsing the large and small business lending options, you’ll undoubtedly come across deals that look amazing. However, don’t just jump blindly into these deals. There is likely a reason why they’re offering such a low interest rate that will cost you in the long run. Try checking the loan’s comparison rate.
You Cannot Use the Same Lender When Refinancing
The truth is that you don’t have to go to another lender to get a better mortgage deal. When you’re refinancing, you should definitely try to talk to your existing lender first. They could have new loan products that are better than what others offer first.
If you’re satisfied with the services your current lender offers you, but not the terms of the loan, you will definitely want to talk to them. Your lender may offer you custom solutions based on your current loan with them.
There’s another reason why you’d want to stay with your current lender as well. If you stay with your current lender, you dodge a lot of exit and establishment fees, along with lenders mortgage insurance.
Since You Already Have a Home Loan, Refinancing Will Be Much Easier
Just because you’ve gone through the ordeal that is getting a home loan, it doesn’t mean that any of it will translate to getting that loan refinanced. In fact, refinancing takes about as long and can be as difficult as your home loan.
Refinancing can take an average of 3-4 weeks. Of this time, two weeks are for getting your home valued and informing your existing lender of the refinance.
Your existing lender can also cause some delays when your new lender sends a discharge request. It can take 14 days for your current lender to send a reply with payout figures. This is because they aren’t in any rush to get rid of that debt.
Now that you’re more informed, you should be able to make better decisions regarding whether or not to refinance and with whom. Don’t forget to do even more research into the topic if you still feel unsure about what to do. Just remember, refinancing isn’t a magic cure that’ll fix all your debt issues. You still need to be fiscally responsible at the end of the day.
Are you looking to refinance your mortgage in Sydney? Wealthy You has you covered! We’re an Australian mortgage company that’s been servicing Sydney for almost a decade. Get in touch with us today to find out more about our offers.