Refinancing is the process of moving your existing home loan agreement to a new lender. Some common reasons why a borrower may do this is to achieve a cheaper interest rate, to structure their debt in a more suitable way, to consolidate their debt or look to release equity from your property.
With interest rates on the rise, many borrowers are taking action to research the market for a better deal however for some, there are still misconceptions holding them back which we will unpack below.
Myth #1 – I don’t have the time and it’s too complicated
This is where a good mortgage broker comes in to play and can break down any perceived complexities. Although the concept may seem like a time-consuming process, the thought and effort required to address your most important investment doesn’t take all that long. Here is a snapshot of some key stages that can quickly be completed under the guidance of a good Mortgage Broker:
- Making the time to speak to your Broker
- Assess the possibilities select the right path for you
- Provide any documentation required
- Sign and complete a loan application
When you consider the benefits and potential cost savings results, a small amount of effort can be well worth it.
Myth #2 – There are large fees involved in refinancing
Whilst there are common fees and charges in leaving an existing bank and setting up at a new bank, generally the overall costs are outweighed by the long-term benefits of refinancing. The costs will vary from lender to lender however some costs to be aware of are Discharge Fees, Applications Fees, Valuation Fees, Land Registration Fees, and ongoing Annual Fees.
Your Mortgage Broker will provide a breakdown of these costs and unless you are able to save money or achieve the new loan structure you require, you are better off staying with your current lender. Some lenders also offer cash-back refinance deals which provide an added incentive to receive a cash reward for moving lenders whilst at the same time secure a cheaper rate.
Myth #3 – Refinancing is only done by people wanting a better rate
As noted earlier, moving to a new bank purely to secure a lower interest rate isn’t the only reason why borrowers will refinance. Whilst this motive is common, there are other reasons why a borrower will look to refinance:
- Access to better features and facilities such as an offset account
- Release equity for investment opportunities, household projects or other acceptable purposes
- Discharge a Guarantor
- Consolidate debt
Engaging with 40 Forty Finance to enquire about your refinance possibilities is the first step in reviewing your existing debt position. We can help evaluate your position and work with you to research the market and identify alternative lenders that will suit your needs. Being proactive will help you save time and money. Feel free to get in contact with one of our friendly brokers to start your refinance journey.