The word ‘refinancing’ is sometimes used to mean restructuring or re-fixing, but they’re actually different things. Restructuring is when you ask your existing lender to change the way your mortgage is set up. For example, you might want to split an existing home loan into an offsetting loan and a fixed rate loan. Re-fixing is when a fixed interest rate term ends and you choose a new one. In the mortgage world, the term refinancing refers to moving to a different lender.
Reasons to refinance a mortgage
Looking into options for refinancing is a sensible part of managing your mortgage well. A different lender may be offering better interest rates or they may have a home loan product that better suits your needs. What’s more, some lenders offer ‘cashback’ rewards to new customers, provided you agree to stay with them for a while. These are generally around .8% of the loan amount. One more reason to look at refinancing is dissatisfaction with the service you’re receiving from your current lender.
Mortgage refinancing costs
Before you rush into signing up with a new lender, it’s important to check the costs and make sure you’ll still save money overall. Typical costs can include early repayment fees if you break a fixed home loan, lawyer’s fees, getting a new valuation of your home and repaying any cash reward you’re still locked into with your current lender.
When should you refinance your mortgage?
Apart from when you’re moving house or buying a second property, one of the best times to consider refinancing is when a fixed interest rate is about to end. If you’ve done your homework you’ll be ready to act as soon as it comes off fixed, so you won’t have to worry about early repayment or break fees.
Another good time is when there’s a significant change coming up in your life. It could be something like starting a family, getting a pay rise or inheriting money. Or you may want to borrow more to finance renovations or a life goal. These are times when you usually restructure your mortgage so it better suits your needs, so you might as well look into refinancing with a new lender as well.
Getting expert refinancing advice and time-saving help
Working out the best mortgage structure, shopping around for the best deals and putting in a solid mortgage application can take a lot of time and energy. That’s where Apex Advice can make a huge difference. Our mortgage advisers can help you understand the options that are best for your needs, then take care of the negotiating and applying on your behalf. They’re paid by the lender you choose, so there’s usually no cost to you for the work they do. It just takes all the worry and guesswork away.