Most mortgage holders are across the “Why” of refinancing, but it is also crucial to be aware that timing can play a significant part in making the decision to refinance.  Here’s a look at the particular milestones or times when  refinancing should be a serious consideration for all mortgage holders.

If Your Fixed Rate is About to Expire

The last twelve months have seen many mortgage holders face the reality of looking over a rather steep fixed rate cliff. In the past few years low rate fixed products were understandably popular with those seeking a home loan but with many of those low rates now expiring, there are some home owners faced with the rude awakening of what several interest rate hikes look like. It is therefore imperative to seek guidance from your mortgage broker and see if there are more competitve options available once the inevitable happens.

If Your Interest Only Period is About to Expire

For investors with interest only loans, we cannot stress enough the importance of having a loan review when the interest only period is coming to an end. With the changes in investment lending over recent years, banks have shifted their policies regarding interest only loans and the way they are serviced. Make sure you talk to your Mortgage Broker prior to the expiration, as if another interest only period cannot be sought from your existing lender, then looking at others may be a sound strategy.

If You Have an Ageing Loan

The older a loan, the least likely it is going to be competitive in the current market. The lending landscape is volatile at the best of times, so regular reviews of your loan product and rate are a must. As a rule of thumb, you would want to make sure you have a conversation with your Mortgage Broker every year to either tweak your current arrangements or overhaul to a new Lender, if you stand to benefit from doing so.

If You Were on an Introductory Rate

Some mortgage holders are seduced by introductory or “honeymoon rates” when taking out a new mortgage facility. These products usually offer a discounted rate for the first couple of years, but when this period expires the loan will revert to a new product and a rate that is likely to be significantly higher. If you had an introductory rate when your loan settled, then it may be time to look at when it expires and have a contingency plan in place.

If Your Personal Circumstances Have Changed

When taking out a new loan some customers may have had extraordinary circumstances that meant they were limited to the Lenders whose policies fit their unique personal position. For instance, perhaps there may have been a credit impairment such as discharged bankruptcy or defaults on their credit file. Alternatively, at the time the applicant may have had a more modest income available which limited Lender options due to servicing. If you think changes in your personal position may have a positive impact on your potential lending options, then a review with your Mortgage Broker should be high on your list of priorities.

If You Have Gained More Equity?

In the case where a mortgage holder settled on their loan with a high loan-to-value ratio, there is a good chance the interest rate applicable was not the sharpest in the market. Quite often banks price their loans in accordance with how much deposit is available, with those loans in the over 80% LVR bracket having higher interest rates due to increased risk. If your equity position has improved through the loan being paid down significantly or property market upward movements, there may be scope to refinancing to a cheaper product.

If You Are Purchasing Additional Property

Expanding your property portfolio is an opportune time to review your overall lending options. There is no reason that you should stay with your existing bank when settling on a new property. You want to make sure your new arrangements are still financially savvy, and you are maximising your returns as an investor. What some mortgage holders don’t realise is that you can refinance to a new Lender at the same time you settle on a new property.

If You Aren’t Sure Your Current Lender Has Your Back

Loyalty is a noble quality, but it only gets you so far in the world of finance. If you don’t believe your current bank has been looking after you or met your service expectations, then a review of your options could be timely. Your Mortgage Broker can determine if there are suitable options elsewhere.

Refinancing is not as difficult or time consuming as you might think. With an experienced team on your side guiding you though the process, now may be the right time to review your options and make sure you are not paying too much on your home loan. Contact Blackburne Mortgage Broking to find out just how easy it really is.