Refinancing (or remortgaging) is a normal part of the homeownership experience, however, it can be a big decision.
Kiwis choose to refinance their home loan for a multitude of reasons, including
- Consolidating their debt
- Increasing their borrowing to fund renovations or to invest
- To secure a competitive home loan interest rate
- Or, to change their home loan rate from fixed to variable, or vice versa.
Refinancing could be a great way for you to save thousands on interest and finish paying off your mortgage faster! But how do you make the change?
Shop around for the most competitive interest rates and compare.
Just because interest rates have gone down, doesn’t mean your bank will automatically offer you a better deal. You’ll need to shop around and see what options are available to you.
This is where a mortgage broker comes in handy. It’s always a good idea to get an expert opinion on these big life decisions. Get in touch with loan market advisor, Sanjeev Jangra, to discuss your next move. Sanjeev is an industry expert with a wide range of contacts so he can help you source the best options for your situation.
Find out your break fee.
While refinancing could save you money, there may also be a cost. If you’re currently on a fixed-rate mortgage, you’ll need to find out what your bank would charge you as a break fee. This should be taken into consideration when comparing the pros vs cons of a new mortgage along with any other hidden costs – including the repayment of any cash incentives you may have received previously or any exit/discharge fees.
Decide if it’s worth the change.
It’s important to consider all aspects of refinancing before making the jump. Remember, interest rates are not forever. It’s extremely likely that they’ll change again in the future, and perhaps even increase, meaning that your savings no longer outweigh the fees and costs. It’s difficult to predict what will happen down the track, so make sure you consider your options and are sure it’s the right choice for you.
If you’re refinancing in order to access your equity, it’s crucial that you do your sums correctly and that there is enough equity available in your property to proceed with your plans. Online calculators like this one can help you figure out how much you could save.
Applying for the new mortgage.
The application process will include answering some mortgage application questions and providing documentation – i.e. proof of income, assets, employment etc. If you end up switching to a new lender, there may be further checks along the way such as a property valuation. Keep in mind that these can not only take some time but there could be an extra cost involved.
If you’d like to know more about your options as a homeowner, or are interested in becoming a first home buyer, get in touch with Sanjeev today.