Is now the time to refinance? 3 points you should consider

When considering refinancing your home loan, there are three main questions you should ask yourself to ensure you get the best outcome for your unique financial situation.

Question 1: What are your reasons?

Getting the best interest rate possible is one, but may not be the only motivation for refinancing. There are other reasons that can make good financial sense:

Accessing equity to fund home renovations, business expenses, other property investments or major expenses like a new car
Shortening or lengthening the term of your loan to suit your current or changing circumstances
Consolidating debt – like high interest smaller loans or credit card debt – to simplify the management of your finances

Question 2: How much equity do you have in the property?

Using the current value of your property and the amount owing on your loan you can determine your equity. Using the Avant Property Report platform^# generated by CoreLogic can provide you with an estimated value of your property and other handy insights, such as suburb growth trends and estimated rental yields.

If the equity in your home is under 20%, a new lender may charge lenders mortgage insurance (LMI) when refinancing your loan for their protection against possible default. However, many lenders will waive LMI for doctors who are seen to have a lower credit risk profile, so it is important you work with a lender who understands your circumstances.

The larger the amount of equity in your property, the greater your borrowing potential, which will be helpful if your goal is to finance renovations or other investments.

Question 3: What will refinancing cost?

While finding a lower rate may be easy, you also need to identify the associated fees and charges, which should be factored in when calculating the total savings. Common costs to be aware of include:

Discharge fee – paid to your current lender to cover administration costs of terminating your loan.
Break costs – if your current loan has a fixed rate your lender may charge you to cover the cost of your loan ending before the originally agreed term.
Application fees – charged by some lenders and can cost up to $1,000.
Valuation fee – covers the cost of valuation of the security property.
Government charges - the cost charged to deregister and re-register the mortgage.
Settlement fee – paid to your new lender to cover the cost of arranging settlement for your loan.

Finding the right loan can be difficult and time consuming. It is important to have a medical finance expert guiding you through the process and helping you secure the most appropriate loan product for your unique needs.

Disclaimers

^#Digital property profile reports (Property Reports) are produced by RP Data Pty Ltd trading as CoreLogic Asia Pacific (CoreLogic). Avant is not liable for any loss, damage or injury suffered (even if caused by negligence) as a result of using or relying on a CoreLogic Property Report.