How to refinance your home loan

With recent reductions in official interest rates, many homeowners are wondering if refinancing their home loan could offer better terms. Refinancing means replacing your current loan with a new one, often to save money or change your loan features.

Here are the key steps involved:

1. Clarify your goals
   Think about why you want to refinance. Are you aiming for a lower interest rate, changing your loan structure, accessing equity for investment, or something else? Knowing your goals helps you focus on the right options.
2. Estimate your equity
   Calculate how much equity you have in your home. Equity is the difference between your property’s value and your remaining mortgage balance. For example, if your property is worth $1 million and you owe $400,000, your equity is $600,000 or 60%. Having at least 20% equity can often help avoid extra costs like lenders mortgage insurance.
3. Check your credit report
   Request a free copy of your credit report from providers such as Equifax or Experian. Review your score and look for any errors that could hurt your application. Improving your credit score by paying bills on time and reducing debt can make lenders more willing to offer favourable terms.
4. Speak to a mortgage broker
   A mortgage broker can assess your situation and help identify loan options that align with your goals.
5. Compare home loans
   Your broker will research the market and present you with a shortlist of loans suited to your needs.
6. Submit your application
   Once you select a loan, your broker will lodge the application and manage the process.
7. Property valuation
   The lender will arrange a valuation to confirm the current market value of your home as part of their risk assessment.
8. Settlement of your new loan
   When the new loan is approved, your existing mortgage will be paid out, and you’ll start repayments under the new loan terms.

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If you’re thinking about refinancing or want to explore your options, contact Mortgage Suite Baldivis to get started with personalised support.

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