Refinancing can do loads for you and provide you with a wave of financial and personal benefits. In some cases, you may experience a low-interest rate, which could reduce your monthly payments. Other times, you can also reduce your loan term so you can complete payments at a faster rate, though it naturally comes with higher monthly payments.
There's no denying that these benefits can significantly help manage your finances. However, many people still don't maximise its benefits since they aren't sure when to refinance or how frequently they can do so. All this information is crucial to maximising the gains of getting your loans refinanced.
With that being said, it's best to speak to the best mortgage brokers so you can weigh in your options and see if refinancing is the best move you can make based on your financial situation.
If you're considering refinancing, keep reading. Here's everything you need to know about refinancing — how often you should do it, when to do it, and what to consider. Let's take a look!
How Often Can You Refinance Your Loan?
Generally, there are no rules as to how often you can refinance your home loan. But you need to remember that you still need to meet certain credit requirements to your lender, which will often include your credit history, income, and assets criteria.
There's no denying that refinancing can be a viable solution that could help you save money, depending on your circumstances. However, it pays to understand the costs associated when you refinance to not outweigh the savings you'll get from refinancing.
When Should I Consider Refinancing?
Change is inevitable, and your circumstances can change unexpectedly. In some cases, you may have to deal with a switch of jobs, experience financial setbacks, starting a family, and more. All of these events can trigger big financial commitments, and refinancing can help you with this.
Besides new financial commitments, when your fixed-term loan is coming to an end, it's best to consider refinancing. Fixed-term loans often have a lower rate for a fixed period and revert to a higher rate, increasing your monthly repayments.
This is why it's important to review your mortgage and speak to a reliable mortgage broker to know the different options available that could help your current financial situation.
What Do I Need to Consider When Refinancing?
Before getting your loan refinanced, you need to know if it'll make sense with your financial health. Here are some of the things you need to consider:
- Cost: When you make modifications to your loan, it will come at a cost. Refinancing will also bring in some application fees, discharge fees, break costs, and more. In some cases, lenders will have a "no-cost" refinance, but in the end, you're still paying a higher interest rate to cover the costs.
- Lenders Mortgage Insurance: Having 20 percent equity in your home loan may require you to pay Lenders Mortgage Insurance. The reason behind this is that you can't transfer an existing LMI to a new loan, even if your lender is no longer at risk.
The Bottom Line: There's More to Refinancing Your Home Than Just Changing Loan Terms
There are many things you need to consider when considering to refinance. With that being said, it truly pays to compare the different home loans in the market before you make big financial moves. Additionally, the best mortgage broker can also help you choose the best financial option for your case.
How Can We Help You?
Dealing with loans and mortgages can seem complicated for many. Fortunately, Wealthy You has made things easier for you.
We are an Australian Mortgage Company that's been serving Sydney for almost a decade. We've provided our clients with effective mortgage solutions that meet their financial needs.
Are you looking for the best mortgage brokers in Sydney? Speak to one of our agents today!