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How does loan refinancing work?

Loan Refinancing

If you are thinking about refinancing your car loan or home loan, it’s important to work out what’s involved first. Here we will look at why you would want to refinance, the benefits of refinancing, what to look for when refinancing, and what you need to do to find the best refinancing deal for you.

What is refinancing?

When you refinance your car or home loan, you are essentially getting a new loan to pay off your old one. This can be done through your current lender or a new lender. You would usually do this to get a car or home loan that better suits your circumstances, or to unlock equity in your house.

Why would you refinance?

You may choose to refinance to raise extra money:

  • To raise money for a large expense, such as home renovations, building an extension or a pool
  • To raise money for a purchase, such as a car
  • To raise money for an event, such as a wedding

Or you may choose to refinance to get a car or home loan that better suits your needs:

  • To get a lower car or home loan interest rate
  • To switch from a variable rate to a fixed rate, for example if interest rates are low and look like they are set to rise
  • To get a car or home loan with lower fees and charges
  • To get a car or home loan with more features (or fewer features, if you no longer need them)

What are the benefits of refinancing?

You could refinance to get a better rate, which could help to save a substantial amount of money over the length of your car loan or home loan.

To give an example: A 0.25% saving on a $500,000 Home Loan can save you more than $29,000 over the life of your home loan*. If you would like to see the saving we can achieve for you visit our meet or beat promotion.

You could switch to a fixed rate loan, locking in a lower rate than you would pay on a variable loan, again saving you money. This could also help to give you peace of mind that you have locked in your rate, and you know how much you will pay on your car loan or home mortgage for the next few years.

You could refinance to get more flexibility or features on your loan, which could allow you to pay off your loan faster.

You could refinance to unlock equity in your home, giving you extra cash to renovate, consolidate debts, make a large purchase or to invest with.

How do you refinance your car or home loan?

While there are numerous benefits to refinancing, there are also numerous factors to consider as well. On top of that list is the cost of refinancing. Check the costs of refinancing your current car or home loan, as you may have to pay fees or charges to refinance.

Once you have worked out how much it will cost to refinance, look for a car or home loan that will make it worth your while to make the switch. Compare car or home loans, making sure to choose one that offers features and rates that suit you.

Then it’s simply a matter of applying and getting approval. Once the car or home loan has been approved and all documentation has been signed, your new lender should arrange for your old loan to be paid off.

Lend Me – Car Loan & Mortgage Brokers – Perth, Western Australia

*Savings calculated on a 30 year loan term. These examples are actual client cases that had specific situations and needs, our responsible lending process will apply in all cases. See our credit guide for further detail.

How we've helped our clients...

"Starting up a new business isn’t easy, with so many things to think about it can be quite a stressful process. With the services of Lend Me Asset Finance and Locate Me, they have really helped to take this stress away in the way of meeting me on my job sites to sign documents and dealing directly with the Car Dealers, Bobcat Dealers and even my accountant.

The guys at Lend Me really do take the time to listen to what you are after and work in to suit you and make the transaction so simple and convenient, I can’t thank them enough! I’ve also recommended their services to 3 friends already and have only had good feedback. Lend Me have certainly gained a client for life! Reece"

"Hi there, Saturday just gone, I picked up my dream car, a 2013 black lancer LX.

I'd like to take this chance to say Lend Me Car Loan customer service was by the far the best I have ever received. What I thought was going to be tough work turned out to be the opposite. The process easy, simple and quick for me, she did the hard yards... I will be recommending friends and family... Thanks again! Regards, Stephanie"

I just wanted to say thank you... This has been the smoothest process. You and the other girls I dealt with at Lend Me Home Loans were so friendly and so efficient with everything, I felt like I was the only customer you were dealing with.

I will definitely be raving on to loads of people about Lend Me and the great service you provide.

I am stoked, this will take so much pressure off and will seriously change our lives... we can actually get ahead on payments and start saving some more money.

Thanks again, Kath :)

"Emily & I just want to take this opportunity to say a very big thank you for seeing us through our first home purchase and home loan, you have been a massive help not to mention getting us out of a sticky situation. We will definitely be in touch in the near future and will refer/recommend you to our family & friends if looking out for a friendly, helpful and reliable mortgage broker.

Take care and speak soon. Matt & Emily" 

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