By Austin Tanner. Freelance Writer.
It’s fortunate to know that home loans are not fixed to one lender. Instead, you can switch to another lender and refinance your loan. Many home loans experts advise homeowners to review their current mortgage to ensure access to the most competitive products available.
Most finance professionals suggest refinancing if you are no longer happy with your current lender. Home refinancing means moving your home loan to a new financial institution. The new lender will consider it a new application, which means they will have to re-value your property.
Although refinancing usually involves a new lender, there are some circumstances when your current lender will offer to refinance your property. Here are some latest trends to know about home refinancing 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 might be an excellent year 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, final payments were processed in April 2021. So, if you’ve relied on this program to get by, you may have to wait for a while before refinancing and try to find additional income opportunities. The waiting period may vary between lenders.
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 by:
- Having 20% equity or more of the property.
- Having other sources of income (rental, investments, etc.).
- Having few financial obligations (other loans and medical expenses).
- Maintaining your property in a sellable condition should you default on payments.
Do You Qualify for Home Loan Refinancing After a Repayment Holiday?
It is advised to apply for home loan refinancing after a 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 new financial obligations.
- Seek secondary sources of income.
Lenders require proof that your financial conditions have improved to a point where you’re capable of on-time repayments. It is best to check with your potential lenders first, as policies may vary.