Refinancing By Home Loan Type
It’s important to understand the differences between loan types and how those differences affect your refinance options.
It’s important to understand the differences between loan types and how those differences affect your refinance options.
It’s important to understand the difference between loan types and their impact on refinancing options.
Self-managed super funds (SMSFs) can be refinanced just like any other home loan. This allows you to benefit from everything refinancing might have to offer—accessing a better deal, a lower rate and flexible features.
However, there are some things to be aware of when refinancing with a SMSF loan. These types of loans usually come with a long list of terms and conditions, so familiarise yourself with these before proceeding. Refinancing with a SMSF can also take longer to process and may be more complex than other types of loan refinancing. It makes sense to seek professional help if you’re considering refinancing through a SMSF.
If you refinance a fixed rate home loan, you could be charged ‘break costs’ if you repay the loan early. This is because home loans are legally binding contracts between borrowers and lenders.
By switching to a different lender, you may break an agreement with your current lender. As a result, your lender may expect compensation through fees. In order to minimize the amount of fees you will incur, Aussie Broker recommends that you speak to one of our friendly consultants who can help you decide if refinancing is right for you.
In certain instances, refinancing an interest-only loan may be beneficial.
For instance, if interest rates have dropped and you are still paying a higher interest rate, you may want to switch to a principal and interest payment schedule or to access equity in your home.
If you’re interested in refinancing an interest only loan, your broker can help you determine if it’s the right time to switch.
Transferring or refinancing a home loan from a variable interest rate to a fixed one.
Refinancing a variable-rate home loan is usually easier and more cost effective than refinancing a fixed-rate loan. This is because there are no early termination fees for variable home loans, which were abolished back in 2011. However, there may be some other fees to consider. These include mortgage discharge fees on the old loan and application fees on your new home loan.
You may also be asked to pay lenders mortgage insurance (LMI) if you plan to refinance but have less than 20% equity in your home (in other words, you are borrowing 80% or more of your home’s market value).
Rather than wondering whether switching to a new home loan is the right step, talk to your local My LMI Group broker. They can crunch the numbers and help you find out if refinancing is right for you. Plus an appointment with an Aussie broker is free. Get in touch today.
Let our team of financial experts help you.
Book an appointment online with a My LMI Group broker today.
Browse our My LMI Group local finance brokers Australia wide.