20 Sep 5 Top Tips For Mortgage Refinancing
Mortgage refinancing makes sense when your fixed term interest rate is nearing an end, interest rates have dropped, or your financial situation has changed. By refinancing your mortgage, you may be able to take advantage of lower interest rates, save on mortgage repayments, or cash out some of the equity in your home. But before you go ahead, it’s good to know how to get the most out of your mortgage refinancing. Here are 5 top tips for mortgage refinancing.
1. Know your credit score
A good place to start is to check your credit score, as it can make a difference to the interest rates you’re charged. If your credit score is poor because of late or missed repayments in the past, lenders may charge a higher interest rate. Or your application for mortgage refinance may even be turned down. To improve your chances of getting a better deal, you should be aware of any negative data you have on your credit report and take steps to repair your credit. If you’re struggling with debt, our Personal Lending Team at Max Loans can help consolidate your debt into a single personal loan with an overall lower interest rate, reducing the interest costs you pay and helping prevent or minimise damage to your credit score. Alternatively, it may be appropriate to consolidate that outside debt into your mortgage when refinancing. A Mortgage Adviser from Max Mortgages will be able to advise on what this option might look like.
To check your credit score, request a copy of your credit report for free from any one of the three credit reporting bureaus in New Zealand that capture, update and store all consumer credit information. Once you receive the report, review it carefully and check for any inconsistencies. If you find an error, report it to the credit bureau and request a correction.
It’s a good idea to regularly request and review your credit report so that you have an accurate view of your current financial situation before you refinance your mortgage. Talk to one of our experienced Mortgage Advisers at Max Mortgages if you need advice on how to improve your credit score ahead of mortgage refinancing.
2. Work with a Mortgage Adviser to compare options
Choosing the right mortgage product isn’t always easy. With so many home loan options available, it can be hard to know which is the right one for you. Working with a Mortgage Adviser – someone who understands the mortgage landscape, and has an extensive knowledge of home loan products – helps set you up for success.
At Max Mortgages, our Mortgage Advisers work with a range of mortgage lenders, including all the main banks and many of the non-bank lenders too. Our Mortgage Advisers are experienced at helping clients get the right home loan NZ wide to suit their needs. In many cases, we’ve had success securing mortgage refinance for those with bad credit or poor credit scores too, helping clients get back on track financially.
3. Explore the cost of refinancing
One of the most common reasons why homeowners refinance a mortgage is to take advantage of lower interest rates. While it can be tempting to refinance a mortgage when interest rates have dropped, the lowest interest rate isn’t always the best one for you. That’s because refinancing a mortgage by ending a fixed term interest rate early usually comes with a cost. Early termination fees, legal fees and house valuation fees could negate any savings you achieve with a lower interest rate, and the cost to refinance could end up outweighing the benefits.
Do your homework first and calculate whether it’s a financially viable decision to refinance a mortgage when you compare the costs with the savings. Remember to factor in any cash back deals that you received when you signed up with your existing lender, as these may need to be refunded if you’re considering breaking your fixed interest rate term early. Talk to one of our experienced Mortgage Advisers at Max Mortgages if you’re not sure whether refinancing a mortgage is right for you, and we would like to help you take every factor into account and do the sums to work out if a refinance makes financial sense for your particular situation. As ethical Mortgage Advisers, we always act in the best interests of our customers and will only recommend refinancing when it genuinely suits you and the benefits of refinancing your home loan outweigh the costs.
4. Shop around for a better interest rate
While the amount of legwork required in shopping around for the best rate may seem daunting, it’s well worth the effort. There are several online comparison websites you can use to check current home loan offers. Or have a look at the Max Mortgages’ interest rate comparison page right here for the latest interest rates across New Zealand.
The best way to shop around though, is to work with a Mortgage Adviser who can do the legwork for you. Your Mortgage Adviser will compare a range of home loan options, present suitable home loan products for you to review, and help you make an informed decision about which option is the right one for you.
Remember though, that interest rates are just one part of the savings equation and it’s important you compare other factors too. Some lenders offer cash-back deals or other incentives to encourage homeowners to switch lenders, so it’s worth considering these when deciding whether or not to refinance a mortgage.
5. Get your paperwork together
As part of the mortgage refinancing approval process, lenders may require quite a bit of documentation. Here is a list of the documentation you may need to have on hand:
- Proof of income: three most recent payslips, or your most up to date financial statements prepared by an accountant if you are self-employed.
- Debts and expenses: bank statements showing your current balance on loans, credit cards or HP agreements.
- Proof of ID
- Proof of address
As part of our service, we are available to guide you through the mortgage refinance process, help you collate the paperwork and complete the application form, making the process a smooth and seamless one.
Refinancing your mortgage with help from Max Mortgages
Deciding whether or not to refinance your mortgage isn’t always an easy decision. But with the right information and a Mortgage Adviser at your side to guide you through the process, you can make an informed decision that will positively impact your financial future. Get in touch today to find out more about mortgage refinancing.Contact a Mortgage Adviser
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