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Home loans are one of the biggest financial commitments most Aussies ever make. As life changes however, so do our needs. That’s why it makes sense to check in on your home loan and ensure it’s still working for you.
If you think it might be time for a change, there is an opportunity to improve your financial situation by switching products or lenders, you might want to think about refinancing.
This could quite literally be the million-dollar question. It’s important you have a clear view of the motivation and reason for refinancing before beginning the process or switching lenders.
To get you started, we’ve put together five key questions to ask yourself before refinancing your home loan.
Refinancing your home loan is the process of getting a new loan to replace an existing mortgage – this could be with the same lender through moving to a new product, or switching to a new mortgage with a different lender. While some may refinance their home loan to take advantage of a lower interest rate, others do so to consolidate their debts. Refinancing could also help you access any equity built up in a property.
Keen to learn more? Read 'How to Refinance your Home Loan?’
There may be costs involved with refinancing and switching lenders or products. Ranging from loan application fees with your new lender, to a discharge fee with your outgoing lender, an even property valuation and risk fees - refinancing isn’t as straightforward as changing your direct debit details.
Make sure you read the terms of your current loans carefully (including break fees, interest rates, comparison rates etc.) and weigh these up against the features of any refinance options you’re considering, including the loan term.
Keen to learn more? Read our article: Refinancing your loan? What fees to expect
It’s possible that some people may have to pay a risk fee that their chosen lender requests, to offset the risk or otherwise protect the lender. For example, a Lenders Mortgage Insurance (LMI) fee will most likely be required where the amount you borrow is above 80% of the property’s value.
Before thinking about refinancing, fully consider your financial goals and understand your current situation.
This article provides you with factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser. Neither Pepper nor its related bodies, nor their directors, employees or agents accept any responsibility for loss or liability which may arise from accessing or reliance on any of the information contained in this article. For information about whether a Pepper loan may be suitable for you, call Pepper on 13 73 77 or speak to an accredited Pepper Money broker.
All applications are subject to the credit provider’s credit assessment and loan eligibility criteria. Terms, conditions, fees and charges apply. Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.
©Pepper Money Limited ABN 55 094 317 665; AFSL 286655; Australian Credit Licence 286655 (“Pepper”). All rights reserved. Pepper is the servicer of home loans provided by Pepper Finance Corporation Limited ABN 51 094 317 647. Pepper Asset Finance Pty Limited ACN 165 183 317 Australian Credit Licence 458899 is the credit provider for asset finance loans.