Did you know that home loans are not fixed to one lender? And you can switch to another bank through refinancing? Many home loans experts advise homeowners to review their current mortgage to ensure access to the most competitive products available.
Max Funding’s Second Mortgage Consultant Shane Perry suggests refinancing if you’re no longer happy with your current lender. He says “Home refinancing means moving your home loan to a new financial institution. The new lender will consider it a new application, which means they’ll have to re-evaluate your property’s value’”
Although refinancing involves a new lender, there are circumstances when your current lender offers to refinance. But before anything else, here are some latest trends to know about home refinancing in 2021:
It’s A Good Time To Refinance
Since June 2019, the Reserve Bank of Australia has reduced interest rates six times—causing new historic lows of interest rates. Additionally, they have expressed reluctance to raise the cash rate in the next few years. Because of this, 2021- 2022 might be an excellent time to refinance a mortgage. With record-low interest rates, you can save thousands with a fixed interest rate.
How Does JobKeeper Affect Your Refinancing?
The JobKeeper wage subsidy program has helped millions of Australians stay afloat. However, they processed the final payments last April 2021. So if you’ve relied on this program, you may have to wait for a certain period before refinancing your home and try to find additional income opportunities. The waiting period may vary between lenders.
Remember that lenders assess a wide range of factors to determine whether the applicant is eligible or not. These include sources of income. You can strengthen your application with the following:
- You have a 20% equity or more of the property
- You have other sources of income (rental, investments, etc.)
- You have few financial obligations (other loans and medical expenses)
- Your property is in a sellable condition should you default on payments.
Are You Qualified For A Home Loan Refinancing After Repayment Holiday?
It’s advised to apply for home loan refinancing after your repayment holiday. To strengthen your application, do the following:
- Demonstrate a good payment history after your repayment holiday ends
- Build your savings to show your financial sensibility and your capability to take on a new financial obligation
- Seek secondary sources of income
Lenders want to find proof that your financial conditions have improved to a point where you’re capable of on-time repayments. It’s best to check with your potential lenders first, as policies may vary.
Compare Deals Online
The pandemic has dramatically shifted the real estate industry to apply for refinancing a home loan from your desktop or mobile device. In addition, some platforms offer access to comparison tools. They can also help you match with the right lender.
It’s essential to understand your tax situation and settle any outstanding obligation to increase your chances of getting approved. However, taxes can be complicated, and one mistake can cost you a lot of money. Thankfully, the tax experts are ready to help you.