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Refixing your loan means staying with the same provider but choosing a new rate. Your bank might offer a floating rate that is higher but doesn’t require you to keep that rate for a specific amount of time. Alternatively, you can negotiate a fixed interest rate that’s generally lower but requires you to stick to that rate for anywhere from 6-months to a number of years.
Most of the time you can refix you loan up to 60 days before your current fixed term is due to end. What’s more, you can always contact your mortgage advisor even earlier so that you know what to do. Refixing helps prevent your loan from automatically rolling onto a floating rate – which usually has a very high interest rate.
Restructuring goes further than just selecting a new interest rate. Usually when you restructure your mortgage you’ll look at a combination of options that include:
You might want to split your loan into different, smaller amounts at different rates. You might also want to consider changing the type of loan you have to revolving credit or an offset loan.
Restructuring is a tool you can use to change the way you pay back your loan. Sometimes people use restructuring when their life has changed a lot – maybe they have debt to pay back and want to consolidate it into a home loan or take advantage of new products. At other times it might be used to make their loan more affordable if their income has changed.
Talking to a mortgage advisor about any changes to your lifestyle is important before you restructure your loan with a bank.
Refinancing means that you no longer want to keep your loan with your current lender. Essentially, you’re looking to move to a new bank. Refinancing means that you’re looking for a new lender to provide your mortgage and usually with the hope that you’ll get a lower rate or more favourable terms.
People most often refinance their loan when they want to take advantage of lower interest rates or access new products. In both cases, these rates or products will often help you pay your loan off faster but it’s a good idea to wait until your loan is about to come off its fixed-term rate.
Be warned - break fees can apply (banks don’t like it when you leave!) It's always a good idea to your mortgage advisor before refinancing as there might be other options that are easier (like restructuring) that you should consider.
Getting a home loan comes with a lot of new terminology. If you need help figuring out whether refixing, refinancing or restructuring is right for you, working with a mortgage advisor can help. Book a call with Mortgage Ability to find out more about how we can help.
Whether you’re about to start the home ownership journey or would like advice on paying off your existing mortgage faster, we would love to hear from you. Let’s start with a conversation.
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