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When to refinance?

Many people ask, when is the best time to refinance?  Everyone is unique but there are two main reasons people tend to refinance or consolidate.  Angela Wild, Co-founder of Ratebusters online home loans explains what these reasons are and gives you real examples you can relate to.  You'll not only be amazed at how much you could save, but how quickly you could pay of your mortgage!

Ratebusters are the experts in refinance and consolidation taking out mortgage of the year a record breaking 4 times.

Video transcript below:

Angela Wild, Co-founder of Ratebusters online home loans

Angela Wild:  Hi, I’m Angela Wild, Co-founder of Ratebusters online home loans with tips on refinancing and consolidation.  Many people ask me, “how do I know when it’s the right time to refinance?”  Because you are unique, your reason to refinance is unique too.  However, if I take a look at why our customers come to us, there are predominantly two main reasons people choose to refinance.  To save money or to gain access to extra funds to improve their life style.  Let me give you some examples and you can decide which best relates to you. 
Tony and Julie are your typical Australian home owners.  They have a mortgage, car loan, personal loans, credit cards and a store account.  Each month they are paying around $1885.  Over the past 6 months, they have experienced some interest rate rises and the cost of living seems to be affecting them more than it used to.  By simply consolidating these debts into one and choosing a lender with a lower home loan rate, Tony and Julie could reduce their payments to around $1230 a month, freeing up a staggering $599 per month.  Now that’s a good amount of savings to put back into the household kitty.  
Alternatively if Tony and Julie decided their priority was to pay off their debt sooner, they could keep their monthly loan payments the same at $1885 per month, refinance and consolidate to the lower rate and reduce their remaining loan term from 23 years to around 13.5 years.  That means they are debt free approximately 9.5 years sooner.  Quite often the need to refinance can be triggered by new needs or priority.  It’s possible that any of these needs could be achieved through refinancing or debt consolidation.
A brief look at how refinancing works?
Refinancing is essentially trading in your old mortgage for a new one.  So your first step is to find a better loan product than the one you currently have.  To get the most savings, you would look for a lender with a low interest rate and product features that work for you.  Once you have found your new home loan product, ensure your advisor explains all the fees and charges involved in refinancing, so that you are making an informed decision about your change.  Your advisor should explain how long it would take to recover the costs of your move and when your new savings will kick in. 
Now you’ll go ahead and submit a new application just as you did with your last home loan, which will involve such things as preparing a new loan application and providing all the documents your new lender needs to make sure you qualify.  Obtaining a valuation on your property, gaining mortgage insurance approval, signing new mortgage documents.  Quite often your current lender will contact you to persuade you to stay with them, but stay strong, if that loan is not working for you, it’s time to leave it behind.  On the settlement of your new loan, your old debts will be paid out and you are on your way to starting your savings or a better life style.  
I hope you have enjoyed my tips for refinancing and consolidation and here’s a final tip.  Ratebusters online home loans offer rates around 1% below the bank standard variable rate and our loan products offer all the extra money saving features you’ll need.  This makes us the specialist in refinance and debt consolidation and not to mention - “Mortgage of the year” -  a record breaking 4 times as voted by Your Mortgage Magazine.  Thanks for watching!

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