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When should you refinance?

Refinancing a loan usually can help you lower the interest rates to bring down the overall cost of servicing a loan.

Before that, there are so many different factors borrowers need to consider when thinking about refinancing a loan.

The first step is to speak to a mortgage broker about what is your needs and whether you can afford to service a different loan structure. Your mortgage broker will generally find out what is your current existing plan, loan repayments and the structure of the facility whether your current loan structure is still working for you for your future financial goal.

The current value of the property also needs to take into consideration, mortgage broker usually has access to the current property market data and he will able to find out what is the property worth.

Your mortgage broker will have a look at the various loan options and find out whether it’s worth for the borrower to refinance. It’s not usually worth it if it is only going to save a few hundred dollars a year, due to after the exit fee and new lender application fees, you might not have much left. But if it is going to save you more than $1,000 after all the exit fee and application fees, then refinancing might be a good choice.

Another critical consideration is LMI (Lender’s mortgage insurance). If you have paid LMI previously and your current loan LVR (loan value ration) is over 80%, then mean you will need to pay LMI again, if that’s the case, then refinancing is not a good choice as you might have to pay LMI again when refinancing.

If you want to refinance to lower the lending costs, please ask your mortgage broker to negotiate with the bank for a lower rate.

If you do decide to go down the refinancing path, working with a mortgage broker always give you better advantages because mortgage broker has access to multiple loan options from different lenders. If you walk straight to the bank, the bank only sells you what they have, but if you come to a mortgage broker, a mortgage broker can compare product and rate between different lenders and find out the better opportunity from his lenders. A mortgage broker is always working to give you great advice that’s in your best interests.

If you’re looking to lower the costs of your home loan or investment loan, please come and talk to Kevin Poh on 0415 820 016. He will find a better option that matches to your financial goal.

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