Sydney Conveyancing: Refinancing Property
Buying a property should be an exciting event for anyone. However, many find the process of refinancing property very stressful, as they have to deal with financial institutions and try to understand all the legal jargon in the documents. The best way to handle this is to hire a Sydney conveyancing lawyer. Many law firms offer Sydney conveyancing services, which include providing legal advice on mortgages, dealing with financial institutions on behalf of the property owner, and ensuring the whole refinancing process progresses smoothly.
Why do property owners refinance their property?
When it comes to refinancing property, there are several common reasons why property owners would do that.
Securing a lower interest rate: One of the most common reasons for property owners to refinance their property is to obtain a lower interest rate on their existing loan. A lower interest rate not only helps them save money, but also allows them to shorten the term of their loan without much change in their monthly repayment.
Reducing repayments: During times of financial difficulties, most people have to look for ways to cut back on their expenses, including their home loan repayments. By shopping around for a loan with a lower interest rate or fewer fees, property owners can refinance their property to reduce their repayments.
Converting to a different mortgage type: While variable rate mortgage usually start out with a lower interest rate than a fixed-rate mortgage, periodic interest rate adjustments sometimes result in a rate that is higher than the rate for fixed-rate mortgage. When this happens, property owners can convert their variable rate mortgage to a fixed-rate one by refinancing their property. By the same token, in a falling interest rate environment, property owners may refinance their property and switch their fixed-rate mortgage to a variable rate mortgage.
Consolidating debt: Through refinancing property, property owners can incorporate their high-interest debt, such as credit card debt and car loans, into a lower-interest home loan. This reduces the overall interest payable and streamlines all short-term loans into a single long-term loan.
The process of refinancing property
After receiving a formal loan discharge request, most financial institutions require 14 days to process the request. During this period, property owners have to make sure that the loan offer and mortgage documents from the new financial institution are submitted for processing, as this process may take up to three weeks. Once everything is finalised, the existing financial institution will provide a payout amount for the existing loan that the new lender will have to pay.
Refinancing property can be a great financial move for property owners to reduce mortgage payment, shorten mortgage term, and consolidate debt. However, it is best that they seek advice from a Sydney conveyancing lawyer before they make the decision.
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