What is a Mortgage Refinance & Why is it Done?
What is a Mortgage Refinance & Why is it Done?
In recent times, many people on fixed rates have moved to variable rates and started to struggle with much higher rates. Mortgage refinance is a solution that allows people to replace an existing debt with a new one from a different provider that offers lower rates and more favourable terms. Refinancing a home loan can reduce monthly payments, change the length of the loan and improve overall financial flexibility. This blog post takes a closer look at refinancing and the reasons why it’s done.
Take Advantage of Lower Interest Rates
One of the most common reasons people use refinancing services is to take advantage of lower interest rates. These rates fluctuate over time and can differ between providers, which means it’s possible to find better rates that minimise the strain that repayments have on your finances. If rates have decreased since a loan was first obtained, or if a different provider is offering lower rates than their competitors, refinancing can result in significant savings over the life of a loan.
Change the Length of the Loan
Another reason to refinance in Melbourne is to change the length of the loan. For example, if you have a 30-year mortgage but want to pay it off faster, you may refinance into a 15-year mortgage with a higher monthly payment so you can pay less interest over time. Alternatively, a borrower who is struggling to make their monthly repayments may choose to refinance into a longer-term loan. This can lower their monthly repayments but increase the total amount of interest paid.
Switch from One Type of Loan to Another
Refinancing can be used to switch from one type of loan to another. For example, if you have an adjustable-rate mortgage, you may choose to refinance into a fixed-rate mortgage to avoid future interest rate increases. Alternatively, a borrower with high-interest credit card debt may choose to refinance into a lower-interest personal loan. Borrowers can make use of a refinancing calculator to determine whether it’s beneficial for them to refinance in the long run.
Contact Our Refinance Mortgage Broker Today
If you’re starting to struggle with higher interest rates, the team at ARG Finance can advise you on refinancing a mortgage and finding a lower rate with a different provider. Get in touch with our highly knowledgeable and experienced refinance mortgage broker today for advice and support.
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