Published at: 6/21/2016 3:29:22 PM
Get your ducks in a row with our 5-point check for refinancing your home loan.
Your bank will want to see that you can comfortably meet the repayments on your new, refinanced home loan. Aiming to cut back credit card debt or personal loan balances will free up income to help you manage the refinanced loan. Check out our Borrowing Power Calculator to see how repayments on other types of non-home loan debt can impact your likely loan size.
In many cases, refinancing will mean taking on a larger loan, and your bank will want to be sure you can comfortably manage the repayments. Take a look at your likely repayments for a variety of loan sizes, rates and terms to get an idea of what you feel comfortable with. This will provide a better idea of how much you should apply to borrow.
The bank may want to have your home valued prior to refinancing your home loan. If this is the case, treat the valuation a bit like an ‘Open Home’ inspection. Complete those niggling minor repair jobs you’ve learned to live with; consider giving the place a fresh coat of paint; and tidy up the front garden and entranceway – first impressions count.
Have a think about your motivation for refinancing your home loan. Many home owners use refinancing to fund renovations or the purchase of a new car, but whatever the reason, your bank will be keen to discuss whether refinancing your home loan is the best strategy for your needs.
In some cases, refinancing your home loan may not be a suitable choice. As a guide, if you are refinancing to secure funds for business purposes, your lender could recommend a commercial loan.
Refinancing your home loan is the ideal opportunity to take stock of your current loan; see what’s available with other lenders; and weigh up different types of loans and the features they offer. Our circumstances change over the time, and the loan that was best suited to your needs when you purchased your home may no longer be right for your present lifestyle.