What is Refinancing?

Most Australians want to know if it's worthwhile to refinance their mortgage – perhaps you are one of them.

Applying for a refinance normally involves the same procedures as applying for a new mortgage, including submitting an application and supporting documents. The only difference is that the majority of mortgage holders only refinance in order to save money.

Before beginning the refinancing process, there are a lot of factors to think about. Here is our guide to the typical enquiries Australians making refinancing requests make.

What is Refinancing a Home Loan?

Taking out a new loan to replace your current one is known as refinancing your mortgage. You might do this for a number of reasons, including to receive a better interest rate, transfer from an adjustable-rate to a fixed-rate mortgage, or take advantage of the equity you've built up in your house.

How Does Refinancing Work?

Refinancing is fairly popular and can be an excellent strategy to reduce your monthly mortgage repayments. But before making any decisions, it's important to understand how it functions because there may also be some negative aspects.

The refinancing procedure is rather simple: you'll need to look around for a new loan, evaluate rates and terms, and then submit an application for the loan. Once authorised, you'll pay off your current loan with the money from the new one before starting to make payments on the new one.

That being said, it's important to remember that refinancing isn't free. To get a new loan, you'll likely have to pay closing costs and other fees associated with taking out a mortgage.

It is crucial to compare home loans and shop around for the best deal. Remember potential exit fees as well as the costs associated with taking out a new loan. You can be sure that you're getting the best interest rate and terms for your needs by doing this.

Is Refinancing a Good Idea?

You might be able to refinance in order to lower your monthly mortgage payment and hasten the mortgage repayment process. Many considerations should be made before refinancing your mortgage.

• The interest rate environment - Refinancing might help you lower your current mortgage rate if interest rates have increased since you first obtained your mortgage. You must first compare the interest rate you are currently paying with market rates to evaluate whether refinancing can be beneficial.
• The length of your remaining loan term - If you have much time left on your mortgage, you may want to think twice about refinancing. That's because you'll have to pay closing costs and other fees associated with getting a new loan, which can eat into any savings you might realise.
• Your credit score - When you refinance, this will have a big impact on the interest rate that is provided. You'll be eligible for better rates the higher your score.
• Your home's value - If the value of your home has improved since you bought it, refinancing can make sense. By lowering your interest rate and decreasing your loan term, you could save money.

Make sure to consider these four factors first. Doing so will help you make the best decision for your financial situation.

How Long Does Refinancing Take?

Refinancing typically takes four to six weeks to complete. Depending on the lender, the borrower's financial status, and the type of refinanced loan, this period may be shorter or longer.

The lender will present you with a loan offer after successfully processing your application, along with a document outlining the loan's terms and conditions.

Do I Have to Pay Stamp Duty When Refinancing?

Depending on the state or territory you live in, you could have to pay stamp duty when refinancing your mortgage. Legal documents are subject to the stamp duty tax, which can be rather expensive. Your home loan's worth may determine how much stamp duty you must pay in some areas. In others, the amount of the loan determines how much stamp duty you will pay.

It is essential to contact with a solicitor or conveyancer if you are unsure if you will have to pay stamp duty while refinancing your house loan. They will be able to give you advice regarding the particular laws and ordinances that apply in your state or area.

Do I Need a Settlement Agent When Refinancing?

When refinancing your home, you'll need to engage the services of a settlement agent. They will ensure that all the paperwork and legal requirements are taken care of before your loan is approved. They'll also be there on settlement day to ensure that everything goes smoothly and that you receive the keys to your new home.

Although a settlement agent is not necessary when refinancing, it is highly advised. Without one, you can have delays or other issues that could make it more difficult to get your loan approved. Choose a trustworthy settlement agent to guide you through the process if you're thinking of refinancing your house.

Conclusion

There are many factors to take into account while refinancing. But if you do your research and shop around, you can find a terrific refinancing offer that will end up saving you money over time.

We always have UFS mortgage brokers on staff that can assist you. We will therefore work with you to make the process as simple and stress-free as we can in order to secure the best mortgage deal for you. Get in touch with us right away to learn more!