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Refinancing Your Existing Loan

refinance your mortgage

How Does Home Refinancing Work?

Refinancing is simply paying out an existing debt by taking up a new lending facility. The most common refinancing is moving a home loan from one bank to another but this can also incorporate multiple loans into one or alternatively, a client may want to change the existing loan into different splits.

Refinancing can also consolidate other, sometimes smaller debts into the home loan. Debts such as personal loans, car loans and credit cards may come with a higher rate and so by refinancing these into a lesser home loan rate it can assist in freeing up cash for living expenses or a new purchase.

There are often many advantages to refinance your home mortgage early:

  • Home mortgage refinancing will often lower your monthly mortgage payments
  • Refinancing to a lower cost of borrowing
  • Pay down your mortgage faster by lowering the interest rate but keeping your payments the same
  • A home mortgage refinance can allow you to take equity out for debt consolidation, investments or vacations.
  • Refinancing investment properties for better cash flow
  • Refinancing multiple mortgages (first, second, third) to a lower first mortgage rate

Associated Costs

There are usually costs associated with home refinancing. Link Home Loans you can get an idea of the costs and weigh them against the possible financial benefits of refinancing.

  • Prepayment Fees - Some mortgage agreements require a prepayment fee for paying off a mortgage early. This kind of fee is less common when you refinance towards the end of the mortgage term. If you refinance in the middle of your current term, a fee is more likely. This fee is typically a percentage of the principal.
  • Standard Mortgage Fees - Refinancing means you are obtaining a new mortgage after paying off the old one. As such, you may be required to pay the same kinds of fees you did with your first mortgage: legal fees, application fees, title search, title insurance fees, and home inspection fees.
  • Insurance fees- be aware that refinancing may include new Mortgage Insurance fees. You need to weigh up whether a refinance is actually benefiting you. Even though you may be moving to a great new rate, what is the cost to do this. Consult Link Home Loans to see if refinancing is a good move for you.

Free Assessment

If you would like Link Home Loans to provide you with a free home loan assesment then please complete the below form and we will contact you shortly.