Different ways you can refinance your mortgage

By Anouska Linz
Refinancing can be beneficial for borrowers, but did you know there are different ways you can refinance your home loan? Take a look at the strategies below to see which one would suit you.

Consolidate Debt
If you are having trouble managing your financial commitments and debt, this may be a suitable option for you. Debt consolidation is when you combine all of your debt so you have one large repayment, instead of several. This can help you both save on interest and manage your debt easier.

Although you may only have that one repayment to worry about, you should still work hard to pay off the loan as soon as possible. Some borrowers resort back to old habits where they only make minimum repayments and then build up more debt on a new credit card. To try and stop this from happening, you could chat to your lender about having the debt ‘split’ from your mortgage. This way, you will still have the same interest rate, but you will have separate statements and repayments – this will help remind you that you still have debt you need to pay off.

Release Equity
Some mortgage holders use the equity in their home to fund the purchase of another property, renovations or for other purchases. But there are several factors lenders will look at before allowing a borrower to access their equity.

The value of the property is one of the main factors. Most lenders will allow you to increase your loan to 90% of the value of the property but anything above 80% will have mortgage insurance implications. The more equity you have, the better chance you will have at being approved.

If you do want to access your equity, it is important to have a realistic idea about what your property is worth. Speak with your local real estate agent and also do your own research about recent past sales in the area. When doing your calculations, it is best to be conservative and work off the worst case scenario so you can have a realistic idea about how much equity you will be able to access.

Change lenders
No matter how long you have had your home loan for, you should regularly compare it with other loans on the market. Many lenders regularly update their products to keep them competitive, so you may find there is a better home loan option with another lender. If you think you could get a better deal, have a chat with your current lender and other lenders about your situation. If you are happy with your current lender, chat with them first as they may be able to offer you a more competitive loan to keep you. But, if they aren’t will to compromise, then it may be worth shopping around.

Move from bad credit to prime loan
If you currently have a bad credit home loan due to a bad repayment history or too much debt, you may find that you have a higher interest rate compared to other prime loans in the market.

However, if your situation has changed and you are now in control of your finances and reduced your debt, you may be able to refinance to a prime loan. This could mean that you could save a substantial amount of money on interest. Make sure you speak with your lender to see if you would be eligible for a standard loan and if you’re not, find out what changes you need to make in order to be.

Anouska Linz is Manager, Online Sales at State Custodians and has over 10 years’ experience in financial services, both in broking and banking. Holding a bachelors degree in accounting, Anouska quickly discovered a love for mortgage lending and assisting people to achieve their home ownership goals. She leads a team of highly experienced lending specialists who are passionate about finding lending solutions which result in real wins for the customer. She is also a massive netball fan.

For more information on our home loans, visit www.statecustodians.com.au or call 13 72 62.