Refinancing
Are you planning to buy an investment property or finally considering the renovation you’ve always dreamed of? Or perhaps you are looking for a better interest rate to lower your repayments? Well, refinancing might be the answer you were seeking to meet these needs!
SO WHAT IS REFINANCING?
It is essentially the process of paying out your current home loan by taking out a new loan. This can be done with a new loan from your existing lender or through a different lender. Refinancing is usually good for people who find their previous loan not feasible enough for their changed situation.


WHAT CAN YOU USE IT FOR?
Paying off all debts by rolling them into one loan | |
Obtaining a cheaper rate | |
Renovation and home improvements | |
To access cash for vehicle or appliance purchase | |
To switch from a variable rate to a fixed rate role |
BENEFITS OF REFINANCING
Peace of mind with fixed monthly repayments | |
Reduced interest rate and monthly payments | |
Flexibility to pay off loan quicker | |
Consolidation of debts (credit cards, personal loans and other debts) | |
Unlocking the equity in your current property to finance your plans |


DRAWBACKS OF REFINANCING
At times, short-term costs exceed the long term savings | |
Paying interest on the balance for a much longer period |
ADDITIONAL COSTS ASSOCIATED
During refinancing, the new lenders often charge a range of upfront fees which include:
Loan application fee | |
Valuation fee for a professional property valuer | |
Settlement fee |
When you pay off your loan early, say in the first 3-5 years, then exit fees is applicable. It is either a percentage of the loan balance or a fixed amount.
Stamp duty is the tax charged by the state government on your mortgage and is calculated against your loan amount. If refinancing increases the size of your home loan, you will have to pay stamp duty.
LMI is paid by the borrower to insure the lender of any risks that may be associated in case the borrower defaults in his repayments. If you are borrowing 80% or more of your property’s value, then LMI would be applicable to you. Also, LMI is a non-transferable payment, which means that if you refinance you’ll have to pay LMI again.
Mortgage registration fee is paid for registering your loan onto the property’s title record to the Land Titles Office or equivalent.