Refinancing Your Gold Coast Property

Wondering if you could get a better deal on your Gold Coast mortgage?

You’re not alone. With interest rates changing and lenders constantly offering new loan products, refinancing might help you save money or access better features.

What is Refinancing?

Put simply, refinancing means replacing your current home loan with a new one. You might stay with your existing lender or switch to a different one.

The new loan pays out your old mortgage, and you start making repayments on the new loan instead.

Signs It’s Time to Consider Refinancing

If you’ve had your loan for a few years, chances are you’re paying more than you need to.

Did you know that even a small 0.5% reduction on a $600,000 loan can save you over $3,000 each year?

Here’s when you might want to consider refinancing:

• Your interest rate isn’t competitive anymore. Take a few minutes to compare your current rate with what lenders are offering new customers.
• Your financial situation has improved. Higher income or increased property equity could qualify you for better rates and terms.
• You want more flexibility. Your current loan might not have useful features like offset accounts or redraw facilities that newer loans offer.
• Your fixed rate period is ending. This is the perfect time to shop around rather than automatically rolling onto your lender’s standard variable rate.
• You want to tap into your equity. Gold Coast property values have generally gone up over time, which means you might have built up equity you could use for renovations or investing.
• You’re finding repayments difficult. Refinancing to a longer loan term can lower your monthly payments (though you’ll pay more interest over time).

The Benefits You Could Enjoy

Getting a lower interest rate is the most common reason people refinance. It reduces your monthly payments and the total interest you’ll pay over the life of your loan.

Today’s loans often come with features that older loans don’t have, such as offset accounts, redraw facilities, and split loan options that let you have part fixed, part variable.

Refinancing can also let you roll multiple debts into your mortgage. This can potentially lower your overall interest rate and simplify your finances with just one payment to manage.

As your property increases in value and you pay down your loan, you build equity. Refinancing can give you access to these funds without having to sell your property.

If you’re worried about interest rates going up, refinancing to a fixed rate can give you certainty about your repayments for a set period.

Costs to Keep in Mind

Refinancing isn’t free. Here are the costs you’ll need to weigh against the potential benefits:

• Discharge fees: Your current lender will charge around $300-500 to close your existing loan.
• Application fees: Most lenders charge establishment fees for new loans, though some waive these to win your business.
• Valuation fees: Your new lender will want a professional valuation of your property, usually costing between $200-600.
• Lenders Mortgage Insurance: If you’re borrowing more than 80% of your property’s value, you might need to pay LMI again, which can be a significant expense.
• Government charges: Budget for mortgage registration and transfer fees.
• Break costs: If you’re still in a fixed-rate period, breaking early can result in substantial penalties.

Is Refinancing Worth It Financially?

A simple way to figure this out is to calculate your break-even point. Divide the total cost of refinancing by your monthly savings to see how many months it will take to recover the switching costs.

If you plan to keep your property longer than this, refinancing probably makes financial sense.

For example, if refinancing costs you $3,000 but saves $300 per month, you’ll break even in 10 months.

If you’re planning to sell your Gold Coast property soon, the costs of refinancing might outweigh the benefits of lower repayments.

Remember that the interest rate isn’t everything… a slightly lower rate might not be worth it if the new loan has high fees or lacks features that would benefit you.

The Refinancing Process: A Simple Guide

Here’s what to expect when refinancing:

1. Review your current loan: Understand your existing interest rate, fees, features, and any costs for leaving.
2. Check your equity position: Work out the difference between your property’s current value and your loan balance.
3. Look at your credit profile: Address any issues that might affect your application.
4. Research your options: Compare what different lenders are offering.
5. Do the sums: Make sure the long-term savings outweigh the costs of switching.
6. Get your paperwork ready: You’ll typically need recent payslips, tax returns, bank statements, and ID.
7. Submit your application: Provide all required documentation to your chosen lender.
8. Property valuation: Your new lender will arrange an assessment of your property.
9. Approval and settlement: Once approved, your new lender works with your existing lender to transition the loan.

How We Can Help

Refinancing might seem complicated, but you don’t have to figure it out alone.

Our team at Opiak Finance Solutions specialises in helping Gold Coast homeowners:

• Work out whether refinancing makes financial sense for your situation
• Find competitive loan options from our wide network of lenders
• Calculate exactly what you’ll save by switching
• Handle the application and settlement process for you
• Explain complex concepts in clear, straightforward terms
• Find loan features that suit your specific needs

We understand the unique aspects of the Gold Coast property market and can provide advice tailored to your circumstances.

Ready to explore your refinancing options?

Call us on 0466 626 485 for a no-obligation chat about how you could potentially save thousands on your home loan.