What is mortgage refinancing and how can it benefit you? Find out about the mortgage refinancing process and how you can save on your home loan over the long term.
Benefits Of A Mortgage Refinance
What are the possible benefits for you when you refinance your mortgage?
There are a number of benefits that you can claim through a mortgage refinance, the main aim being to save money. Of course this isn’t always the case with mortgage refinancing, you need to make sure that the deal you are making with your bank or loan provider will benefit you over the long term and lead to savings instead of increasing your mortgage. Many Australians have mortgages and with housing prices increasing, so will the amount of mortgages and home loans to pay for homes and business. It is important that you take into consideration a variety of options before you choose a mortgage, but if you feel like the route you took wasn't the best one for you, you are able to change your home loan though a refinance.
You can save through a number of avenues including moving you home loan to get a better rate, moving from a flexible rate to a fixed rate or consolidating a number of your debts so you are able to save across all your debts. The main reason Australians switch their home loan is to secure a better mortgage rate, but there are many other benefits. A mortgage refinance can do more than just lowering your interest rate, some of the benefits include:
To consolidate your debts – paying off all your debts to combine them into one debt with a lower interest rate.
Secure a lower interest rate or monthly fees – you might refinance in order to get a better deal on your current home loan.
When you can’t afford your mortgage – you can refinance to change the terms of the loan to make it more affordable for you to pay it off.
Pay off your mortgage faster – you can refinance your home loan in order to reduce to life of the loan and pay it off quicker, meaning less interest payments and a lower total payment.
To access your homes equity – you may choose to refinance to access the equity in your home giving you the ability to renovate or make a large purchase.
To get more flexibility – you can refinance to get more flexibility and benefits from your mortgage including offset accounts and split facility loans.
A mortgage refinance can be used to help you with any issues with debt that you might have. This involves consolidating your debts to make paying them off much easier. You need to remember that it isn’t always beneficial to refinance your home loan. The interest rate may not be ideal or you may not have much equity in your home. As a general rule, financial counsellors recommend looking over your mortgage every three years to make sure you are still getting a good deal.
Refinancing With A Bad Credit Rating
Changing your mortgage rate with a bad credit rate can be difficult, but can be beneficial
When considering refinancing, make sure you are aware of your credit rating as it can be extremely difficult to negotiate a good deal with a bad credit rating. If you have a bad credit rating but are still looking to refinance, consider talking to a negotiator who can negotiate with your creditor on your behalf. They may be able to get you a better deal, saving you money in the long term.
Refinancing with bad credit is not the ideal situation but it can be used to your advantage in some cases. For example, if you show your lender that you are unable to keep up with the mortgage rate, they may reduce it to something you are able to pay, either by refinancing for a better interest rate or extending the life of the loan.
If you have been keeping up with your payments but something has happened that may prevent you from meeting payments talk to a financial counsellor and your lender as soon as possible about securing a better mortgage rate using your credit rating. You may be able to protect your credit rating by negotiating the terms of the loan. The unexpected can happen, so it is important that you keep on top of your mortgage as quickly as possible.
If you have a good credit rating on the other hand, then negotiating with your creditors should be a lot easier and can come with added benefits offered by your creditors. Often banks and other loan agencies will go above and beyond to keep a customer with a good credit rating as they know they will always pay on time.
Having a good credit rating can also benefit you in other area of finance which is why you should always try to pay on time and get your finances in order. Having a good credit rating can get you a better mortgage rate, allow you to access the equity in your home and give you extra benefits such as an offset account and spit account.
How Do You Negotiate A Mortgage Refinance
A financial negotiator can negotiate with your bank or lender on your behalf
Looking to refinance to a better deal can be a confusing process as it is not something that you will do very often in your life. When you do decide you would like to refinance your mortgage, you should start by making sure you have researched the best deal and know what you are after. You should always go to your bank first and this is where having a good credit rating is extremely helpful. Your bank or lender will go above and to keep you if you have a good credit rating offering added incentives and bonuses to your loan. Even if you are offered a great deal by your bank, you should consider shopping around as other banks and lenders might offer you an even better deal.
If you have a bad credit rating it can be harder to negotiate with your lender and could lead to increased costs in refinancing your loan. Make sure you consider all variables to ensure that the refinancing your mortgage is actually going to save you money in the long run. Consider talking to an expert about negotiating a better deal for yourself. They can help massively when you have a low credit rating, helping you to find the best possible deal available.
Get help with your mortgage refinance using a financial counsellor to get you the best deal on your mortgage rates. At Free Yourself From Debt we use our mortgage calculator which analyses hundreds of deals to find the best solutions for you. Get the best current mortgage rates available. We analyze mortgage rates every day and are able to spot the best deal for each of our clients.
Mortgage Refinancing And Debt Consolidation
Debt consolidation and mortgage refinancing can work together to get you out of debt
Another useful factor of mortgage refinancing is consolidating your debts. Consolidating your debts is where you gather all your debts into one such as your home loan to make easier repayments. This is often done with a mortgage refinance as your home loan interest rate is usually much lower than a credit card rate or other high interest ventures. It is important that if you are considering this that you make sure you have a budget in place so you are able to make your repayments. Otherwise it could end up being more expensive as you loan could last longer leading to more interest repayments over time.
A debt consolidation works by increasing or taking out more money from your mortgage or taking out a new loan if you don’t have a mortgage. You then use this amount to pay off your debts in full. Often your creditors will give you a discount for full upfront payment if you negotiate a deal with them. Once the other debts are paid they are then consolidated with your mortgage or loan. You now have a lower interest rate to pay and only one payment to worry about. You can also negotiate the terms of your loan such as how long you will take to pay it off with your lender through the mortgage refinance.
Once you have secured your mortgage refinance and consolidated your debt you will need to implement a budget to keep you on track. It’s important that you keep up with payments and budget accordingly as getting your debts consolidated is only the first step in reducing your debts. Talk to a debt counsellor about proper, smart budgeting that you can stick to.
If you are looking to consolidate your debt though a mortgage refinance it is a good idea to talk to a debt negotiator about getting the best possible deal. Call the experts at Free Yourself From Debt today on (02) 9011 7919 to start reducing your debts and keeping your credit rating. We make sure that you are set up for the future, with flexible budgeting and consultation with a financial counsellor. Get the help you need to pick the right mortgage or home loan refinance, a decision that can have a huge impact on your finances over the life of the loan. We set you up to succeed, ensuring that you aren't ripped off by dodgy lenders. Get a free consultation by filling out our contact form.