Paying a mortgage loan with a high interest rate might make it challenging for you to save more money or improve the home through expansion or renovation. If your salary has increased and you are already eligible for a mortgage loan with a shorter payment term, you may refinance your home.
Refinance home loan is a process wherein the current mortgage agreement undergoes processing to see what terms can be revised that is beneficial to the borrower. Home refinance provides various benefits such as lower interest rates and shorter repayment periods, allowing homeowners to take advantage of their home equity to take out cash loans for home improvement. Lower monthly payments also significantly reduce the homeowner’s budget on financial obligations, allowing homeowners to experience financial relief.
In countries like Australia, where the real estate market is constantly changing, a refinance home loan is a practical option, especially when the changes in the market are in your favor.
To qualify for a refinance home loan in Australia, here are some things you must consider:
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Minimum time before you can apply for refinancing – Before you can apply for a refinance home loan, you must first spend the minimum amount of time required in your current mortgage loan.
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Credit score – Refinance home loans require a higher credit score because borrowers who apply for a refinance are assumed to have a better debt-to-income ratio and credit score that will warrant them approval for a shorter repayment period and lower interest rates.
Closing cost fee – Closing a mortgage loan requires a payment that starts from 3% up to 6% of the total amount of the loan. Closing cost is the payment dedicated to the total cost of processing your mortgage loan. Closing cost serves to protect the lenders from incurring losses when you decide to close your mortgage loan.
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