Everything You Need to Know About Refinancing for Features

As a dental assistant working in the dental industry, you understand the value of having the right tools to do your job effectively. The same principle applies to your home loan. If your current mortgage lacks features that could help you manage your finances more effectively, it might be time to consider refinancing.

Many Australian homeowners find themselves stuck on high rate loans without the features that could potentially improve their cashflow and reduce loan costs. Refinancing to add features like an offset account or redraw facility can make a significant difference to your financial wellbeing.

Why Refinance to Add Features?

When you initially took out your home loan, you may have prioritised getting approved quickly or securing a particular interest rate. However, as your financial situation evolves, the features attached to your mortgage become increasingly important.

An offset account is one of the most valuable features you can add through refinancing. This is a transaction account linked to your home loan where the balance offsets the amount you owe, reducing the interest you pay. For example, if you have a loan amount of $400,000 and $20,000 in your offset account, you only pay interest on $380,000.

Other features worth considering include:

• Redraw facilities that allow you to access extra repayments you've made
• The ability to make unlimited additional repayments without penalty
• Split loan options combining fixed interest rate and variable interest rate portions
• Portability to move your mortgage to a new property
• The flexibility to consolidate into mortgage other debts like credit cards or personal loans

When Should You Consider Refinancing?

Several situations make it worthwhile to explore the refinance process:

1. Your fixed rate period ending: If you're coming off fixed rate, this is an ideal time to review your loan and potentially access a better interest rate while adding valuable features.

2. You're paying too much interest: A loan review might reveal you're on a higher variable interest rate than what's currently available in the market.

3. Your financial goals have changed: Perhaps you're now looking to access equity for investment or you want to release equity to buy the next property.

4. You want to improve cashflow: Features like offset accounts and redraw facilities can help you manage your money more efficiently.

For dental assistants who may be planning to expand their property portfolio, refinancing can provide the financial flexibility needed to achieve these goals.

Understanding the Refinance Application Process

The refinance application follows a similar process to your original home loan application. Here's what to expect:

Property Valuation: Your lender will arrange a property valuation to determine your home's current value. This affects how much equity you can access and whether you'll need to pay Lenders Mortgage Insurance.

Documentation: You'll need to provide proof of income, employment details, and information about your current debts and expenses. As a dental assistant, having your payslips and employment contract ready will streamline the process.

Loan Review: This involves comparing refinance rates and features from different lenders to find the most suitable option for your circumstances.

Approval and Settlement: Once approved, the new lender pays out your existing loan and establishes your new mortgage with the features you've selected.

Offset Accounts Explained

An offset account works like a regular transaction account where you can deposit your salary, pay bills, and access your money whenever needed. The key difference is that the balance directly reduces the interest charged on your home loan.

For instance, if you earn $65,000 annually as a dental assistant and can maintain an average balance of $15,000 in your offset account, you could save thousands in interest over the life of your loan.

The beauty of a refinance offset account is that your money remains accessible for emergencies or opportunities, unlike making extra repayments directly to your loan (unless you have a refinance redraw facility).

Accessing Equity Through Refinancing

Refinancing isn't just about adding features. It can also help you unlock equity in your property for other purposes:

• Cash out refinance to fund renovations or improvements
• Equity release for investment purposes
• Access equity to purchase an investment property
• Consolidate high-interest debts into your lower interest rate mortgage

If you're interested in buying your first investment property, refinancing your existing home loan might provide the deposit you need.

Comparing Interest Rates When Refinancing

While adding features is your primary goal, don't overlook the interest rate. The refinance process gives you the opportunity to compare refinance rates and potentially access a lower interest rate than what you're currently paying.

When conducting a home loan health check, consider:

• Current refinance rates across multiple lenders
• Whether to switch to variable or switch to fixed, or maintain a split loan structure
• The comparison rate, which includes fees and charges
• Any ongoing account keeping fees

For dental professionals, including dental assistants, specialist mortgage brokers understand the unique employment structures and income patterns within the dental industry. This expertise can help you secure more favourable terms.

Making the Most of Your Mortgage Refinancing

To maximise the benefits of your home loan refinance:

Conduct regular loan reviews: Market conditions change, and what was competitive when you refinanced may not remain so. An annual home loan health check ensures you're not paying too much interest.

Understand all features: Make sure you know how to use your offset account and redraw facilities effectively. Small changes in how you manage your money can lead to significant savings.

Consider your long-term plans: If you're planning to move in the near future, ensure your new loan includes portability. If you're looking at investment loan refinancing down the track, choose a lender that can accommodate multiple properties.

Factor in all costs: While refinancing can save you money, there are costs involved including discharge fees from your current lender, application fees for the new loan, and potential valuation costs.

Getting Professional Assistance

Working with a mortgage broker who specialises in home loans for dental assistants can make the refinance process smoother and more successful. They can:

• Compare refinance rates from multiple lenders
• Identify lenders offering the features you need
• Manage the refinance application on your behalf
• Negotiate with lenders for reduced fees or improved terms
• Provide ongoing support for future property goals

Whether you're coming off a fixed rate expiry, want to save on interest rate payments, or need to access equity in your property, refinancing offers solutions tailored to your circumstances.

Taking Action

Refinancing to add features like an offset account can significantly improve your financial position. The combination of a lower interest rate and better features creates opportunities to save money refinancing while gaining more control over your mortgage.

If your current home loan lacks the features you need, or if you haven't reviewed your mortgage in the past year, now is the time to explore your options. A comprehensive loan review can reveal opportunities to reduce your interest payments and access features that align with your financial goals.

Don't let an outdated mortgage hold you back from achieving your financial potential. The right loan structure with appropriate features can make managing your finances more efficient and help you build wealth faster.

Call one of our team or book an appointment at a time that works for you. We specialise in helping dental professionals, including dental assistants, find mortgage solutions that support their unique circumstances and financial goals.