Today, buying a house requires large investments, which not everyone can afford. Therefore, many people use the service of buying a house on loan - a mortgage. The size of loans for homes in the Australian market is quite high, but on the other hand, not everyone can afford a one-time home purchase.

Interest rates are decreasing every year, therefore, customers who took advantage of a home loan, say three years ago, experience a certain dissatisfaction with the fact that the rates for home loans have dropped significantly during this time. At the same time, they have been in a home on a loan for several years, having not yet fully paid off the creditor. But every day they turn their attention to significantly reduced interest rates during this time, and they are tormented by a certain kind of annoyance, which tells them that if they took a home on a loan a little later, they would save a considerable amount.

Therefore, many homeowners who have taken a house on credit have a desire to change the conditions for buying a house on loan in their favour. But banks are not very eager to change the conditions of a home loan and thereby reduce their profits. There are often vehicles that are left abandoned on properties and such cars can be sold to cash for cars companies. 

Why should I refinance my home loan?

By changing your home loan, you can decrease your monthly repayments. It is possible that you can move to another creditor who offers a lower interest rate and better overall terms. Given that you have a high credit score and never missed your payments, you have a pretty good chance of negotiating a lower interest rate with your existing creditor. There are a few websites where you can get quotes from different creditors after entering your details. Over the term of your contract you will be saving so much money from monthly repayments.

You can also negotiate the length of your loan. The longer it is the less you pay monthly. However, the interest rate also increases when the loan term lengthens. It comes to detailed calculation of everything to decide. There is also something called “switching fee” meaning some policies may cost you when you switch to another lender. In this case, the switch may not be a viable option if the fee is too much.

The size of the monthly payment and the financial burden in general depend on the loan term. Therefore, if the term is changed, the bank will reconsider your application. To change the home loan, you can contact your loan manager. Before that, we recommend that you weigh everything and calculate it again on the websites that offer quotes from different creditors.

Potential cons of refinancing a home loan:

More total interest

As we mentioned above, you may be subject to more total interest due to the extended loan term. Your monthly payments might be decreased but in the long run, you will have paid more than the original loan.

Fees to exit your loan

Again as we mentioned before, it may cost you to leave a policy and get a new one. Ask your loan officer for more detailed information.

Can the bank change the conditions in my application itself?

Yes, it happens. The approved conditions are not an offer, the bank can change them - for example, the approved amount or term, or even refuse to issue a loan at all, but this happens extremely rarely.

This usually happens if your circumstances change after you applied for a mortgage. Therefore, we advise, from the moment of approval until the issuance of a loan, not to change jobs, not to apply for new loans, not to increase credit card limits, if possible.