If you bought a house in Australia in the last 10 years or so, it’s likely your interest rate is the highest it's ever been. Rates have risen rapidly and most borrowers are now feeling the pinch. In this article, we answer some common questions on refinancing a home loan and how a mortgage broker can help with the process.
Refinancing a home loan can be a great way to save money on interest payments, potentially saving you 10’s of thousands over the course of the loan. It can also lead to lower monthly mortgage payments, which helps with cash flow. If you're considering refinancing, you probably have many questions about the process. So here we go!
How Long Does it Take To Refinance a Home Loan?
We have an initial consultation of up to 45 minutes, where we discuss your current and proposed banking facilities. Once we receive all the necessary documents, our team will analyse the information and provide you with the three most suitable refinancing options.
From there, we'll help you choose the best option and process your application with the bank. The entire process, from consultation to settlement, will take just a few weeks. But trust us, it’s worth the wait.
How Much Does it Cost to Refinance a Home Loan?
At BlueRock, the refinancing process is completely free for our clients. The incoming bank pays our team an upfront and trail commission for the life of the loan.
When Can You Refinance a Home Loan After Settlement?
You can refinance your home loan at any point after settlement. However, you need to be careful of exit and penalty fees. These fees can vary depending on the lender and your specific loan, so it's important to work with a knowledgeable mortgage broker who can assist you in navigating these fees.
For example, some common mortgage exit and penalty fees to be aware of include:
- Break fees: This represents the lender’s loss if you repay a fixed rate home loan early or switch loan product, interest rate or payment type during a fixed rate period.
- Deferred establishment fees: charged when you exit a fixed-rate loan during a specified period. Also known as an exit fee. It's to cover the costs the lender incurred in setting up the loan.
- Early repayment fees: charged when you pay off your loan in full or make a large lump sum payment.
- Discharge fees: charged when you switch lenders or pay off your loan in full.
How Much Can Refinancing a Home Loan Save Me?
The amount you could save by refinancing a home loan depends on a few factors, including your loan amount, current interest rate, your remaining loan term, and the fees associated with refinancing.
We can't provide exact figures, in fact we can’t really provide a ballpark figure, as everyone's credit scenario and lending limits differ. But we can say that the process of refinancing, at no cost to you, is almost always worth your time. We're saving some of our clients thousands of dollars by refinancing their existing home loan as rates rise.
Can I Refinance a Fixed-Rate Mortgage?
Yes, you can refinance a fixed-rate mortgage, but it's important to be aware of any exit costs or penalty fees. We can help you navigate these costs and determine if refinancing a fixed-rate mortgage is the best option for you. Remember, we're here to help.
How Refinancing Can Save You Money
Lower interest rates & monthly payments
If you can refinance your home loan at a lower interest rate than what you’re currently paying, you’ll save money on interest over the life of the loan. For example, if you have a 30-year mortgage for $300,000 with an interest rate of 6%, your repayment would be $2,763, while at an interest rate of 5%, your repayment would be $2,387, that’s almost $100 a week of savings!
Shorter loan term
If you’re able to refinance to a shorter loan term, you may be able to save money on interest as well. For example, if you have a 30-year mortgage with 25 years remaining, and you refinance to a 15-year mortgage, you’ll pay off the principal faster and save on interest over the remaining life of the loan.
Refinancing Cashback Offers
Also, banks offer cash incentives to lure new customers via refinancing, often in the range of $2,000 to $4,000 or more. So even if your rate only reduces slightly, you’re likely to end up with some extra cash in your pocket, or use it to offset any break fees. It really is a win win situation!
Get In Touch With An Experienced Mortgage Broker
Refinancing a home loan can be a smart financial move that improves your cash flow and saves you money in the long run. It's important to work with a reputable mortgage broker, like BlueRock, who can guide you through the process and help you make the best decisions for your financial future. Don't hesitate to reach out to me, Jamie King at BlueRock Finance on 0438 726 933 or at jamie.king@thebluerock.com.au .
