How to Refinance Investment Home Loan in 2023

A home loan is the biggest financial decision for many, so knowing how to refinance your investment home loan is important in helping you meet your long-term financial goals and save thousands of dollars. In today’s environment, it makes sense to refinance your home loan in order to get a better rate, shorten the term of your loan, save money, tap into your home’s equity, and make your monthly payments easier. 

Refinancing means switching your loan to a new one. In the past, refinancing a home mortgage was a time-consuming and clunky process. But these days, competition in the loan market and online mortgage brokers have made it easy for homeowners to refinance their investment home loans, get good deals, and leverage the cheapest rates, lowest fees, and fanciest features.

For example, John was paying $2371 monthly payment on his 30 years, $500,000 mortgage with an interest rate of 3%. After 5 years, he decided to refinance his loan to save a bit and shifted to a new loan with a 1.8% interest rate. Now, he has to pay $2,071 per month, saving him $300 a month and $3600 in a year.

If you’re looking to refinance your investment home loan in 2023 to make your financial live easy, then this step-by-step guide is everything you need to get started. 

Assess Your Current Home Loan Situation

The first thing you should do is to look at your current home loan situation. How much are you currently paying? What is your interest rate? Is it a variable or fixed-rate loan? Do you have equity in your current loan? How many years will it take for you to pay it all off? What are some ongoing or annual fees your lender is charging you? 

All of this information should be mentioned on your home loan statement. If not, you can check these details in your account information if your lender provides you with an online banking facility. If somehow, you’re not able to find these details — don’t feel bad. You should call your lender and ask for this information. Knowing these details are important while refinancing and getting yourself a better deal.

Mortgage brokers at NG Loans are happy to help you. Please book a free consultation today to review your current loan

Talk to Your Current Lender About a Better Deal

Next step - you should talk to your current lender and ask for a better deal. In fact, it costs way more to bring new customers than to keep you as a customer so you negotiate more favorable rates. 

After paying your home loan for years, you are a more profitable customer to your lender than a brand new home loan customer. Especially, if you are paying your payments promptly and you are the kind of a customer your lender wants to keep.

You can tell your lender that you are researching to refinance your home loan and what kind of deal it is willing to offer to make your stay. Remember, don’t shoot yourself in the foot — if you have not researched for any other options. It is better to have some kind of leverage before negotiating to get a better deal with your current lender. You can create leverage by doing some research and finding refinancing options other than your lender. 

You might be interested in using Refinance calculator on our website that can help you to figure out how much you can potentially save after negotiation of a better deal.

Even if your current lender offers you a refinancing deal, it’s best to do your research beforehand and evaluate if the current offer suits your financial goals.

Compare Home Loans:

While comparing home loan offers, it’s important to evaluate and compare beyond headline rates so you can get yourself a better deal than before. Online mortgage brokerage platforms help you compare these features from the comfort of your home. Here are some factors to keep in mind along with the interest rate: 

1. Fees: Keep in mind the fees involved while refinancing. There are some high annual or ongoing fees that could eat your value of getting a better deal. Some loan offers charge an annual fee, but give steep rate discounts and waiver other fees. Always consider the fact that fees associated with finding a new lender make your refinancing efforts a good idea or not. 
2. Features: When comparing home loans, examine the features they offer. Some features can prove themselves a gold mine in the long run and help you shave years off your home loan. For example: redraw facilities, and split facilities. 
3. Flexibility: A good refinancing option offers flexibility and lets you manage your loan and finances in the way that’s best for your specific circumstances and financial goals. Some of the flexible options you should consider are extra repayments, loan probability, and more flexible repayment frequency (weekly or fortnightly). 

You can take help from our mortgage brokers to compare rates, fees, features, the flexibility of different home loan lenders in Australia, apply for the bank and choose the best home loan refinancing option most suited for your specific circumstances.  

Consider Costs of Refinancing

The process of leaving your current lender and moving to a new lender includes some costs that you should consider. There are some up-front costs you have to pay to leave your current lender like a discharge fee. The discharge fee is usually a couple of hundred dollars. It shouldn’t affect your refinancing savings much. But you should still check to see how much you are going to pay. If you currently have a fixed-rate loan, you’ll have to pay break costs. Break cost depends on how much your current fixed rate is and how much variable rates have changed plus the term remaining on your fixed rate. Also, figure out if your lender requires you to pay lenders mortgage insurance (LMI) again to leave.

When coming on board with a new lender, you may get charged with an application fee, a settlement fee, and a valuation fee, to name a few. Some lenders run promotional campaigns to get new business. They waive fees for refinancers, or even offer to pay clients some of the costs associated with leaving their current lenders — so look for these kinds of promotions to save yourself a couple of hundred or even thousand dollars. 

Most of the banks are trying to win new customers and offer cash incentives for people who want to refinance their loans. Cash Back offer can cover most of the refinancing costs. Mortgage Brokers at NG Loans can go through all expences associated with refinancing and will find the best solution to minimize or cover these costs.

Apply for New Home Loan

After choosing a home loan that offers you the best deal and the biggest savings, and especially most suited to your financial needs — it’s time to apply. Application processes can vary from lender to lender, there are a few general details you’ll need to have ready.

• Personal Information: Name, date of birth, valid ID, contact information, etc. 

• Financial Information: Details of your employment, income assets and liabilities, pay slips and bank statements etc. 

• Loan Information: Details of your current home loan, repayment history, and outstanding loan amount

• Property Information: Details about your current property. Your new lender will want to have a valuation done to figure out your property current value so they can determine the lending amount. 

We’ve covered a few important steps in this guide, and it’s fairly straightforward. Your refinancing situation may be a different one or a tricky one, but lenders are willing to give you a chance.