Refinance - Accord Home Loans Auckland

Benefits of Refinancing

Refinancing entails repaying your current home loan with a newer one. This could be with a new lender or a current lender, and it could be for a number of reasons.

The refinancing process is comparable to the application process for your original loan, and hence refinancing can take four-eight weeks on average. After all, the process will vary depending on your specific scenario, and some lenders may even be able to provide a quick refinancing. In this section, we will look at the refinancing procedure and how long it can take to refinance your house loan.

Save money

In today’s market, no homeowner can stand to believe that their loan is a fair deal. If you have held your mortgage for a few years, there is a good possibility you may save money. You may be eligible for more savings than you anticipate by achieving a lower interest rate and lowering your mortgage repayments. One of the most compelling reasons to refinancing is to lower the interest rate on your current loan. Historically, it has been assumed that refinancing is a good option if you can cut your interest rate by at least 2%. Conversely, many lenders believe that a 1% savings is a sufficient incentive to refinance. Lowering your interest rate not only saves you money, but it also accelerates the pace at which you create equity on your property and can shrink the amount of your monthly payment.

For example, a 20-year fixed-rate mortgage with a 5% interest rate on a $200,000 home has a monthly principal and interest payment of $1,056. But y our payment would be $970 if you refinanced your loan at 4%. The greatest immediate advantage of refinancing is that it allows cash-strapped borrowers to find room in their monthly budget. This could be useful if you anticipate an increase in your cost of living (for example, if you are expecting a baby) or if your income has reduced (from dropped hours or lost job).

Pay off your mortgage sooner

By refinancing to a lower interest rate, you reduce your overall interest payments and, as a result, your overall mortgage sum. In many instances, borrowers wish to refinance in order to reduce the duration of their existing loan from 25 years to 15 years. Based on the rate of interest you qualify for, this may only have a minor impact on your monthly budget while helping you pay off your mortgage quicker. It is important to understand that it does not have to take 25 or 30 years to pay off a mortgage.

Equity to fund purchases or lifestyle goals

Refinancing is frequently utilised to open up equity in your current property to finance purchases or lifestyle ambitions. Gaining access to equity, for example, could assist you in purchasing an investment property, renovating, or building, among other things. The amount of equity you may use varies by lender, which is why having a home loan specialist on your side can make all the difference when it comes to doing the paperwork. When you refinance, you can also utilise some of the money from your home’s worth to pay for additional expenses: reinvesting that money in other properties or sending their children to college or something like in those lines.

Debt consolidation

Homeowners frequently use the equity in their houses to finance large bills such as a home renovation or a child’s higher education. These homeowners may explain the refinancing by claiming that renovations increase the value of the home or that the interest rate on the mortgage loan is lower than the interest rate on borrowed money from some other source. Through the process of ‘debt consolidation,’ refinancing your house loan can provide an opportunity to consolidate your debt and perhaps reduce the overall interest you are paying on several debts. It entails consolidating many high-interest debts into a single lower-interest debt – which may be your home loan – and may result in a cheaper overall monthly repayment.

Bring on better loan features

Several Kiwi homeowners may have mortgages that are inappropriate for their needs or have “bells and whistles” that are underutilised. Having the correct resources can save you a lot of time in the long term, so it is worth receiving professional advice on how to grasp the various loan options available and how you can benefit from them.

Get professional advice

Everyone’s circumstance is different, which is why it is important to seek expert assistance while looking for a refinancing solution that is right for you. Our mortgage broker is up to date on what is available in the market and the benefits of various loan options. So, if you are seeking a low-interest rate to cut your mortgage repayments, or if your financial position has changed and you are ready for an overall home loan health check, contact us and get your financial health back on track.

Refix or Refinance your Mortgage – What should I do?

Your fixed term loan is coming to an end and you are thinking should I refix for similar term or look for a refinance option to get a better deal.

Guess what, you are not alone.

Most home owners are faced with this question at the end of their fixed term. You have the option of refixing with your existing lender or refinancing.

Refixing is continuation of your existing loan by negotiating a new fixed rate term with your existing Bank. By default, loan moves to variable rate on expiry of your current fixed term. This is the time you could negotiate for better rates with your existing lender and possibly seek incentives for continued loyalty to the bank.

Refinance or refinancing your home loan means pay off your existing loan and start fresh again with another bank which offer better terms. You would consider refinance if the current bank does not offer favourable rates and cash incentives available in the market.

Once you have taken a home loan, it is important to keep yourself attuned with any changes in the interest rates and availability of options which give new and better terms than your current loan.

At Accord Home Loans, we will provide you with the opportunities that meet your needs, give you the options to choose between various banks and lenders and also negotiate the best offer for you.

Let us look at some reasons to revise your current home loan and move on to refix/refinance.

Change in your income

There can be times when your financial situation changes like getting a promotion at a job, getting a surprise bonus, or getting an inheritance which generates more income opportunities for you. Restructuring which may involve breaking your current fixed term on your mortgage at this time turns beneficial as with the new home loan plan, you can increase your monthly payments, hence reducing the loan term and also saving a notable amount on the interest charges.

Change in your lifestyle or circumstances

When an unexpected expense occurs, it creates an impact on your finances. Getting a pay cut, wedding, planning to start a family, etc. may create a strain on your income. This could create cash flow shortfalls leading to loan payment defaults. Reviewing the expenses and restructuring the mortgage at this point can be helpful. You could opt for a longer loan term which will reduce repayments and possibly a better interest rate.

Thinking of consolidating personal loans on home loan

Managing multiple loans and debts and making all the different payments on time can be a daunting task. Each of these different loans (like personal loans, credit card, car loans, etc) will have a possibly higher interest rates. You can opt to consolidate all these loans and select a loan structure that can pay off these debts.

Thinking of redevelopment and / or home makeover

A home makeover calls for additional finances. Whether it is an extension of your house or a makeover, you may want to borrow additional funds for the development.

Savings could be achieved with aligning repayments with cash flows

Did you know that aligning the payments with your salary can help in paying the loan faster. Some people get paid weekly but they prefer to pay their loan payments monthly. Banks calculate interest on the balance on daily basis so if you are able to make the repayments aligned to your salary, you will be able to see the savings instantly.

At Accord home loans, we will evaluate your current scenario and find the best possible option to ensure you repay your loan faster without compromising your life style.

We will crunch your numbers and work out all scenarios to see if refix or refinance may work in your favour. Give us a call today or book an appointment.

First-home buyers entering property market despite soaring house prices

First-home buyers have been determined to enter the property market despite sky-high house prices – making up an increasing part of the Southern real estate market, according to CoreLogic.

CoreLogic’s data for the last quarter of 2020 reveals that first-home buyers made up 27% of all Dunedin buyers compared to only 24% for the same period in 2019. The number of first-home buyers in Invercargill increased from 26% to 28%, while the rates were steady in Queenstown (17%) and Central Otago (9%).

In Dunedin median prices increased by 1.9% to $582,000, Invercargill 2.5% to $379,000, Central Otago 1% to $592,000, and Queenstown 1.3% to $1.21 million.

CoreLogic head of research Nick Goodall said first-home buyers had changed their expectations about what and where they could buy, used their KiwiSaver funds, and taken advantage of low-interest rates to enter the market. However, doing this might not work in the future.

“At the current rates of growth, entering the property market will certainly become more difficult throughout the year,” Goodall said, as reported by Otago Daily Times.

Nidd Realty owner Joe Nidd added that places in Dunedin previously known as state housing areas and seen as undesirable were now fiercely contested by first-home buyers. Investors had also become active again, increasing demand further.

Well-built houses on good-sized sections with good views and sun are also in demand, regardless of areas’ previous perceptions.

Housing stock hits record low

First-home buyers and investors might struggle to climb the property ladder this year as housing stock hit record low across New Zealand in December despite a year-on-year 19.2% increase in new listings, according to realestate.co.nz.

The latest data released by realestate.co.nz revealed 6,592 new listings in December 2020, with 1,064 more properties coming on to the market last month than in December, 2019. However, housing stock was still down year-on-year in almost every region in New Zealand, with 16 of 19 regions dropping to all-time lows since records began 13 years ago.

“Although it’s promising to see pockets of new listings coming on to the market across the country, it was largely our major centres that did the heavy lifting last month,” said Vanessa Taylor, a spokesperson for realestate.co.nz.

“We’re still seeing a lot of competition in the market, and I expect this will continue to drive strong prices in the first quarter of 2021, encouraged by low mortgage rates and a lack of international travel.”

Only 12,932 homes were available for purchase at the end of December, which was a 13-year record low and 29.1% less than the same time last year, according to realestate.co.nz.

Only Auckland, Gisborne, and Central Otago/Lakes avoided hitting 13-year record stock lows last month. Meanwhile, Wairarapa, Coromandel, and Nelson & Bays had the lowest stock compared to 2019, decreasing by 58.5%, 50.3%, and 49.2%, respectively.

“The stock shortage will likely continue to prove challenging for buyers at the beginning of 2021. This is a long-term factor impacting the New Zealand market, and the number of Kiwis returning from overseas, combined with low mortgage rates and lack of international travel, is only adding to the demand for property,” Taylor said.