Refinance Home Loan

Is a refinance home loan the right option for you? This site considers the pros & cons of refinancing.

In years gone by, many Australians that took out home loans stuck with the same home loan for years, usually until it had been paid off in full. Most people didn’t consider or even realize that they could refinance a home loan, and therefore continued with the same loan no matter what.

These days, consumers are far more savvy when it comes to finances, and many have realized the benefit of taking steps to refinance their home loan. These days,  mortgage refinance  is considered at some stage by many borrowers. This has resulted in the average home loan term in Australia dropping to just four or five years, because homeowners are making the effort to refinance their home loans more regularly in order to save money and reap the benefits.

The home loans market in Australia has become very competitive, and this means that lenders are striving to offer the most competitive deals in order to attract both new customers and entice borrowers away from rival lenders by giving them the incentive to refinance their home loan. You can compare refinance rates and repayments using and advanced mortgage repayment calculator.

What is a refinance home loan?

Home loan refinancing is where an existing debt – in this case a home loan – is replaced with a new one with different terms and conditions. This could be through the same lender or through a different lender. When a borrower decides to refinance their home loan they basically do what they did when they applied for their existing home loan, and usually the same checks will be carried out by the lender. If the checks, such as credit checks, home valuation, and checks on any other financial commitments secured against the property, come out fine then the lender will usually approve the new home loan, which will replace the old one. The borrower will then have refinanced their home loan.

It is important to remember that when you refinance a home loan you are not taking out a second loan. Any second loan would be in addition to your first home loan, but in the case of refinancing the new home loan is to replace the existing one and is not being taken out in addition to it.

Read more about refinance home loans
Refinance home loan tips
Refinance home loan pros & Cons

Things to consider if you plan to refinance your home loan

There are a number of questions that you should ask yourself before you apply to refinance your home loan, as this will further clarify whether this is the right solution for your needs. Some of these questions include:

• Is your credit good enough to get a good refinance deal? Many people have experienced problems with finance and bills payments over the past couple of years, which have been financially turbulent for many Australian households. It is therefore a good idea to check your credit file and rating to see whether you are likely to get a good deal on a refinance loan before you make any applications. Please see our other guides on best home loan rates, mortgage comparison and other money saving tips.
• Can you afford the necessary upfront fees required to refinance your home loan? The fees and charges that you will have to pay upfront will vary depending on your current lender and the new lender, and it is important that you take all of these into account so that you can determine whether you are able to comfortably afford the necessary upfront costs.
• Will you save more money by refinancing your home loan than you will spend on the process of refinancing? Again, this involves thoroughly working out the amount of money that you have to pay upfront to refinance the home loan and then working out how much you can save by refinancing so you can determine whether it is worth it. If you you have a number of loans to consolidate, see our debt consolidation loans  tips.
• If you are refinancing to reduce your monthly repayments to cut the risk of default because you are struggling will you comfortably be able to afford the new repayment? Many people refinance a home loan because they are stretching their finances to the limits with their existing mortgage repayments. You need to ensure that if you are refinancing for this reason that you will be able to comfortably afford the new repayments.