Refinancing,
the instrinsic value.
" The road to building wealth and long-term financial stability requires strategic management of your liabilities - just as thoughtfully as you manage your assets"
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Portfolio review
Interest rates are extremely competitive amongst lenders in the market and generally the lower the assessed risk, the lower the interest rate. Accordingly, with the value of the security property being offered and the level of borrowings against it.
This is referred to as the “loan to lending value ratio” (LVR)
The refinance process may open up new opportunities once you ascertain your updated property values, such as unlocking equity in your mortgage, altering your repayments to assist with lifestyle goals, or simply adjusting the length of your repayment term.
You may also benefit from a' financial detox' by consolidating multiple debts to improve your overall cash-flow.
Alternative driving factors may be for further investing, property renovations or simply more flexibility in the loan structure.
A personalised strategy in pursuit of your goals
Refinancing through a broker offers a variety of exclusive resources, privileges, and personalised service, which has become an increasingly prized commodity in today's automated & digitised finance world.
In addition to tailoring products to suit your circumstances, there is also the convenience of consolidated services and holistic advice under one financial roof.
Our clients receive encompassing services from their Mortgage Advisor that acts as the liaison with all of the departments within the bank to deliver a complete end-to-end solution.
We handle every aspect from application, to mitigating credit terms with the bank, right through to co-ordinating documentation and facilitating settlement with your existing and new lender.
Whether it is a specific product mix, the ideal use of equity, or interest rate hedging options, we can help you make an informed decision.
Fixed rate loan
The interest rate is fixed for a certain period, usually the first one to five years of the loan. This means your regular repayments stay the same regardless of changes in interest rates. At the end of the fixed period you can decide whether to fix the rate again, at whatever rate lenders are offering, or move to a variable loan.
Advantage
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Your regular repayments are unaffected by increases in interest rates.
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You can manage your household budget better during the fixed period, knowing exactly how much is needed to repay your home loan.
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Disadvantage
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If interest rates go down, you don’t benefit from the decrease. Your regular repayments stay the same.
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You can end up paying more than someone with a variable loan if rates remain higher under your agreed fixed rate for a prolonged period.
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There is very limited opportunity for additional repayments during the fixed rate period.
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You may be penalised financially if you exit the loan before the end of the fixed rate period
Variable rate loan
Standard variable loans are the most popular home loans in Australia.
Interest rates go up or down over the life off the loan depending on the official rate set by the Reserve Bank of Australia, and funding costs.
Your regular repayments pay off both the interest and some of the principal.
You can also choose a basic variable loan, which offers a discounted interest rate but has fewer loan features, such as a redraw facility and repayment flexibility.
Advantage
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If interest rates fall, the size of your minimum repayments will too.
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Standard variable loans allow you to make extra repayments.
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Even small extra payments can cut the length and cost of your mortgage.
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Basic variable loans often don’t come with a redraw facility, removing the temptation to spend money you’ve already paid off your loan.
Disadvantage
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If interest rates rise, the size of your repayments will too.
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Increased loan repayments due to rate rises could impact your household budget, so make sure you take potential interest rate hikes into account when working out how much money to borrow.
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You need to be disciplined around the redraw facility on a standard variable loan. If you dip into it too often, it will take much longer and cost more to pay off your loan.
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If you have a basic variable loan, you won’t be able to pay it off quicker or get access to money you have already repaid if you need it.
Interest only loan
Home loan repayments are based on paying off two factors: the principal (loan amount owing) and the interest (rate set by the lender charged on the principal).
Most home loan repayments in Australia are designed to pay both the principal and interest each time. However, some lenders do allow homeowners the option of paying just the interest with their repayments, also known as an interest only home loan.
By only paying for the interest charges on your home loan, your repayments are significantly reduced.
Home loans with interest only repayments are typically set to revert to principal and interest repayments after several years. This is because by only repaying interest charges, you’re not actually chipping away at your principal owing - meaning, your home loan debt is never actually being repaid.
Mortgage Offset
An offset account is a savings account or transaction account linked to your home loan account. The account’s balance (or a proportion of that balance) is ‘offset’ daily against your home loan balance, and as a result you’re only charged interest on the difference between the total loan balance and the amount offset.
For example, if you had a loan of $350,000, with $100,000 in a linked 100% offset account and $100,000 repaid, you may only pay interest on $150,000 of your balance.
Interest is calculated daily, so even if some of your pay is withdrawn after only one day it has still contributed to reducing the amount of interest you incur. The longer you are able to keep the money in the home loan account, the less interest you will be charged.