Given the current landscape, it is practical for borrowers to try refinancing their mortgages because the interest rates are at their lowest. That said, refinancing is not only about getting the lower rate for your mortgage but also a strategy that you can use to help you better manage your finances.
To help you out, Wealthy You, the best mortgage broker in Sydney, shares some of the advantages that you can look forward to when you refinance your mortgage:
You Can Consolidate Your Debt
One of the things that you get to do when you refinance your mortgage is to consolidate your debt. That means if you are having problems managing all your obligations and other financial commitments, refinancing is an ideal solution for you. That way, you can combine all your debt and have one repayment per month instead of several ones. This can save you on interest and at the same time help you manage your debts. Note that the repayments when you consolidate your debt will be higher, so you still need to pay off the loan as soon as you can.
You Get to Release Equity
If you plan to renovate your house or invest in another property for passive income, you should consider refinancing your mortgage. Doing so allows you to access the equity you’ve built in your home for the past years. You need to understand the considerations the lender has to make when you apply for refinancing for them to release equity in the property. The biggest one is the property’s value - whether or not the property has appreciated. It’s a different scenario if it turns out the value of the house depreciated. While most lenders allow you to increase the loan to 90% of the property’s value, anything over 80% will already affect your mortgage insurance. In a nutshell, the more equity you have, the higher chances you have of being approved.
You Can Move from a Bed Credit to a Prime Loan
If you presently have a bad credit home loan because of a bad repayment history or too much debt, you might find that the interest rate is higher than other prime loans. You can move to a prime loan when you refinance to a lender and prove that your situation is different now. If you can show your new lender that you have better control of your finances now, you might get a competitive rate than the others. Speak to your lender to determine if you’re eligible for a standard loan and if not, learn what changes have to be made so you can be.
You Can Change Lenders
One rule that every borrower should know is that they should always check the market for more competitive offers. It doesn’t matter how long you have had your current loan. You should still compare it with the other ones on the market. Most lenders update their products regularly, so you may find a better option with another lender. If you think it’s possible for you to get a better deal, speak with your current lender about your situation, as they might be able to provide you with a more competitive loan to keep you from choosing a different lender.
Considering the benefits discussed above, you’ll see why it makes a lot of sense to refinance your mortgage, especially now that the interest rates are at an all-time low. However, as with any other financial decision, you should weigh its pros and cons based on your specific situation to ensure that what you decide will be to your advantage. You can also seek advice from the best mortgage brokers in your area who can shed light on what is best for your particular circumstance.
Wealthy You is among the best mortgage companies in Sydney that can provide you with tailored mortgage solutions to meet your specific needs. We can make refinancing your mortgage simple and hassle-free. Contact us today to know more!