Refinancing Your Investment

If you haven’t done it for a while then you may find that you are signed up to an out-of-date mortgage with an uncompetitive interest rate.

The good news is that you can probably refinance and save yourself a fair bit of money.

What is refinancing?

Refinancing is when you take out a new loan and use it to pay off your old investment property loan.

There are many reasons to refinance. Some of the most common include consolidating a number of debts into one, accessing a lower interest rate to save money, and borrowing more to refurbish a property or buy another investment property.

What should I consider when refinancing?

The considerations when refinancing are similar to those when you took out a loan in the first place.

You need to find out who offers the features you want with the most competitive rate, and then compare it to your current mortgage. It is important to shop around and consider online lenders, because they often have the lowest rates.

One of the main issues to consider is what type of interest rate you are looking for:

Fixed interest rate: Lock in your interest rate for 1, 2 or 3 years and enjoy the peace of mind of knowing that your repayments won’t change over that period.

Variable interest rate: Enjoy the flexibility of making extra repayments when you want to and a lower rate on average. However, be aware that your repayments could change at your lender’s discretion.

Split rate loan: Lock in part of your loan and leave the rest variable. This means you will be partly protected from any rise in rates, while enjoying the flexibility to make extra repayments when you want to.

Next you will want to consider if you want a redraw offset facility or a streamlined loan with no offset.

Mortgage offset: A 100% redraw offset facility can help you pay off your loan faster and with less interest. Whenever you put money into your redraw offset facility that money is 100% “offset” against your home loan, reducing your interest.

No offset: The main advantage of a streamlined loan with no offset is a slightly cheaper rate.

Once you have decided upon the type of loan you want, shop around and compare rates between lenders.

A lot of people are amazed when they realise how much they can save in the long term by refinancing their investment property loan to one with a lower rate. Even small differences add up to a lot over time.

For instance, at the time of writing an investor with a $400,000 loan with one major bank could save more than $100,000 over the life of the loan by refinancing with loans.com.au.

Now, it is time to apply for your new loan. If you choose a loans.com.au Fast Trax Refinance, you can do it all online and we will even take care of discharging your loan with your current lender, making refinancing your loan a hassle free and rewarding experience.

Recommended reading

Refinancing my existing home

Smart homeowners are refinancing to get the best home loan deal they can, save money and achieve their financial goals sooner.

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Renovating my home

There's something exciting about taking out a home mortgage and buying a new house.

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How often should you refinance your home loan?

Most home loans are set up for 25 to 30 years.A lot can happen in that time. Your circumstances can be expected to change considerably as you switch jobs, have kids, and experience financial windfalls and setbacks.

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