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Mastering the art of refinancing

In a nutshell, refinancing is where you switch from your current mortgage product to a different product. This may or may not be with the same lender. Many investors and home owners consider refinancing at some point in their property owning life cycle.

However, just as getting a loan isn’t always as straightforward as it first appears, refinancing also has some of its own differences that you may not be familiar with. While some are tempted to stay with their loan until they sell, savvy property owners know that they should be reviewing the performance of their mortgage on a regular basis to see if they can get themselves a better deal.

Refinancing, in the right situation, can also improve your cash flow on a property that’s currently in your investment portfolio. This may make your loan-term longer, however for some this is preferable to selling.

Often, you could save yourself money in the long term and/or reduce the life of your loan by considering refinancing. Obviously, these are both positives for those seeking to improve their financial future. However, it may also be an option if you’re looking for a way to finance a renovation or a major purchase, such as an investment property or a car, by releasing some of your equity.

Refinancing commitments, according to July 2013 Australian Bureau of Statistics data, are on the increase. The trend of refinancing for owner occupied housing was up 1.8% in July, following a rise of 2.3% in June. This was mirrored by the seasonally adjusted figures of 1.7% in July and 3.7% in June. Clearly, refinancing is becoming a popular option as the property market heats up, interest rates decline, and property owners seek to maximise their returns.


This article is from Property Observer's free ebook Mastering the Art of Refinancing: 12 tips for success and key things to consider.


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