Should you refinance for a better deal?
Refinancing a loan can take advantage of lower interest rates to bring down the overall cost of servicing a loan. However, it’s not always the best, or the only, option.
There are many different factors borrowers need to consider when thinking about refinancing a loan.
First, speak to an expert about your needs and whether you can afford to service a different loan structure. An accredited mortgage broker will need to understand about your existing loan, repayments, and the structure of the facility.
Also, the current value of the property is taken into consideration, so the credit adviser will require access to current data that will indicate what the asset is worth.
Second, your credit adviser will look at the various loan options and figure out whether it’s worth it for the borrower to refinance. It’s not usually worth it if it’s only going to save a couple of hundred dollars a year, taking into consideration exit and application fees. But if it’s going to save upward of $1000 a year, refinancing might be a sensible approach.
Another key consideration is lenders’ mortgage insurance (LMI). If switching loans means you will need to pay LMI again, sometimes it’s not worth refinancing.
If you want to refinance to lower lending costs, ask your credit adviser to negotiate with the bank for a lower rate.
If you do decide to go down the refinancing path, working with a credit adviser rather than going straight to a bank has advantages because the adviser has access to loan options from a larger number of different lenders.
Credit advisers can compare lots of different lenders and, if there is a better opportunity, they’re able to access it. Credit advisers are always working to give you great advice that’s in your best interests.
When you are ready to lower the costs of your loan, speak with an approved credit adviser to have on your side.
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