How to Refinance Your Home Loan to Change Loan Terms

Why Consider Refinancing Your Home Loan?

If you've been making mortgage payments for a while now, you might be wondering if your current home loan is still working for you. Maybe your fixed rate period is ending, or perhaps you've heard that there are lower interest rates available. Whatever your situation, refinancing your home loan could be worth exploring.

Refinancing simply means switching your existing mortgage to a new loan - either with your current lender or a different one. Many homeowners in Alkimos are discovering that a home loan health check can reveal opportunities to save thousands of dollars or access features that suit their current lifestyle.

When Should You Think About Refinancing?

Timing matters when it comes to mortgage refinancing. Here are some situations where refinance might make sense:

• Your fixed rate expiry is approaching and you're concerned about what happens next
• You're stuck on a high rate and want to access a lower interest rate
• You need to release equity in your property for renovations or investment purposes
• Your financial situation has improved and you want to reduce loan costs
• You're coming off fixed rate and the variable interest rate doesn't look appealing
• You want to consolidate debt into your mortgage to improve cashflow
• You're looking for improved features like an offset account or redraw facility

Understanding the Refinance Process

The refinance application doesn't need to be overwhelming. Here's what typically happens:

1. Loan review: We assess your current mortgage and your goals
2. Property valuation: The lender determines your home's current value
3. Compare refinance rates: We look at current refinance rates across different lenders
4. Application submission: Once you're happy with the terms, we submit your refinance application
5. Settlement: Your new loan pays out the old one, and you start fresh

For Alkimos residents, having a local mortgage broker who understands the area's property market can make this process much smoother.

Refinance to Lower Your Interest Rate

One of the most common reasons people refinance is to access a lower interest rate. Even a difference of 0.5% can save you significant money over the life of your loan. If you took out your mortgage a few years ago, there's a good chance you could potentially access a more favourable interest rate now.

Let's say you have a loan amount of $500,000 with 25 years remaining. Dropping your rate by just 0.5% could save you over $35,000 in interest payments over the life of the loan. That's money that could go towards other financial goals or simply stay in your pocket.

Accessing Equity for Your Next Move

Another reason to consider refinancing is to unlock equity in your home. If your property has increased in value since you bought it, you might be able to access this equity for various purposes:

• Release equity to buy the next property as an investment
• Fund major home renovations
• Consolidate high-interest debts
• Access equity for investment opportunities

This is sometimes called a cash out refinance, and it can be a smart way to use your property's value to achieve other financial objectives.

Changing Between Fixed and Variable Rates

Your circumstances might have changed since you first took out your loan. Perhaps you initially chose a fixed interest rate for certainty, but now you want the flexibility to make extra repayments with a variable interest rate. Or maybe you're currently on a variable rate and want to lock in a rate for stability.

Refinancing gives you the option to switch to variable or switch to fixed, depending on what suits your current situation. If your fixed rate period is ending, this is the perfect time to review your options rather than just rolling onto your lender's standard variable rate.

Improving Your Loan Features

Mortgage products have evolved, and newer loans often come with features that weren't available when you first borrowed. Through refinancing, you might gain access to:

• Offset accounts that can reduce the interest you pay
• Redraw facilities for accessing extra repayments
• The ability to split your loan between fixed and variable portions
• Lower fees and charges
• More flexible repayment options

These features can make managing your mortgage much more convenient and potentially save you money.

How Much Could You Save?

The question everyone wants answered is: how much could I actually save by refinancing? The answer depends on several factors:

• Your current interest rate versus what's available now
• Your remaining loan amount and loan term
• The fees involved in refinancing
• Whether you're paying too much interest with your current lender

For many homeowners in Alkimos, the savings can add up to tens of thousands of dollars over the life of the loan. Even accounting for refinance costs, the switch often makes financial sense.

The Cost of Refinancing

It's important to be aware that moving your mortgage does come with some costs. These might include:

• Discharge fees from your current lender
• Application fees for the new loan
• Valuation fees for property assessment
• Legal fees and government charges

However, many of these costs can be added to your new loan amount, and the long-term savings often far outweigh the upfront expenses. A thorough loan health check can help you understand whether the numbers work in your favour.

Is Refinancing Right for You?

While refinancing can offer numerous benefits, it's not always the right move for everyone. Consider refinancing if:

• You have at least 2-3 years remaining on your loan
• The potential interest rate savings outweigh the costs
• Your property has maintained or increased in value
• Your credit situation is stable or has improved
• You're looking to consolidate into your mortgage

If you're unsure whether refinancing makes sense for your situation, speaking with an experienced mortgage broker can provide clarity.

Working with G&T Finance in Alkimos

At G&T Finance, we understand that every homeowner's situation is unique. Whether you're coming off a fixed rate, want to reduce your interest payments, or need to unlock equity, we're here to help you understand your options.

We take the time to review your current loan, compare what's available across multiple lenders, and explain the refinance process in plain language. Our goal is to help you make an informed decision about your mortgage that aligns with your financial objectives.

Call one of our team or book an appointment at a time that works for you. We'll conduct a comprehensive review of your home loan and show you what opportunities might be available to improve your mortgage situation.