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Refinancing tips for investment properties

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Refinancing offers investors a chance to get out of a high-interest loan and unlock equity in their current investment property. If you find yourself in a loan with unfavourable rates and terms, it may be a good idea to refinance your loan. 

The good news is you can find plenty of competitive investment home loans right now. For a truly successful home loan refinance, keep these tips in mind: 

Understand the full cost of refinancing 

When you refinance your investment loan, you could save thousands on interest. However, the process of applying for a home loan refinance can cost you.

Additional fees depend on the lender you choose. Usually, borrowers need to pay application fees, valuation fees, discharge fees, break fees, settlement fees, mortgage registration fees, and exit fees. Some lenders may waive certain fees (like application fees) but charge you higher ongoing fees instead. 

If you want to save on upfront and ongoing costs, home loan refinance at loans.com.au has no application or ongoing fees. We charge a once-off $220 valuation fee (approx) to assess what your home is worth and a $300 settlement fee once you settle your home loan with us. 

Shorter loan terms could save you more 

Instead of restarting at 30 years, generally the default option, consider a shorter loan term when refinancing.

If you’ve already been paying off your mortgage for a few years, refinancing to a new 30-year term means you’ll extend the time it takes for you to be debt-free. Also, you may not save as much on interest.  

Sometimes, it’s necessary to add more time to your loan term. For example, if you’re purchasing a new property, taking on a few extra years could smooth your monthly repayments and allow you to better manage your cash flow. But generally, shorter loan terms mean more savings even if the monthly repayments are slightly higher. 

Know the equity on your investment property 

When you refinance your loan, you may have access to the equity of your investment property. If you’re planning on using the equity of your property to purchase more real estate, it’s important to figure out exactly how much equity you have on your property. 

Compare refinance rates carefully 

Using comparison rates, look at the standard rates of each lender. A good way to understand the true introductory rate of a home loan is to look at the comparison rate. 

If a lender is offering rock bottom rates, be wary as they may be offering honeymoon rates which is when lenders lower their interest rates for a one- or two-year period before the rate reverts to the standard ongoing rate.  

With these honeymoon rates, you’re guaranteed a great discount for only a year or two but once the honeymoon period is over, you may see a huge rate increase. What once looked like an attractive loan isn’t so appealing anymore. 

Don’t be afraid to ask questions 

With so many different investment loan refinance options, it can get confusing and overwhelming, especially for those less experienced. If you’re unsure about something, it’s best to speak to a lending specialist. 

At loans.com.au, you can book an appointment with our friendly lending specialists and discuss your investment loan refinance concerns. Our team can help you find the ideal refinance to help you achieve your investment goals.  

Start your home loan journey with us! Apply now or speak to one of our lending specialists at 13 10 90.

About the article

As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.

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