Mortgage Refinance In Victoria: Things To Consider
One of the most significant aspects of every mortgage application is refinancing applications. This is because the current low-interest rates on mortgage encourage a lot of homeowners to reconsider and restructure their finances. But whether you need a mortgage refinance in Victoria solely depends on your circumstances as an individual and not the current interest rates on the mortgage.
If you reside in Victoria and you need a mortgage refinance in Victoria, there a lot of things you need to put into consideration. In this article, you will be shown some of the things you need to consider before opting-in for mortgage refinance. Here are some of them:
In the past few years, the standards for approval of loan has really been tightened by lenders. So a lot of clients might find it surprising that even when they have good credit, they won’t always qualify for very low-interest rates.
On an average, the credit score lenders like to see are from 720 and above before you can qualify for the lowest interest rate on the mortgage. If your scores are not very high, you can still get a new loan, but the fees or interest rate you will pay might be higher.
The Cost of Refinancing
The refinancing of a home often costs about 3% to 5% of the amount of the load, but you can still look for ways to bring down the costs. If a borrower has enough equity, they can roll the financing cost of their home into their new loan; this will increase the principal.
Some lenders provide refinancing that incurs “no-cost,” this means you will have to pay in an interest rate that is a little bit higher to cover the cost of closing. You can also negotiate if you want to, as some refinancing fees can be reduced.
Home equity is the very first qualification a borrower needs for mortgage refinance in Victoria. The reduction of values of homes has made a lot of borrowers to be more indebted to their mortgage lenders than the current value of their home. Some others have very low equity.
With a conventional lender, it is most times impossible to refinance with a very little or no equity at all. One way of finding out how qualified you are for a particular program is by visiting and discussing with a lender regarding your personal needs. If your home equity is around 10% to 15%, then you might not have issues qualifying for new loans.
Ratio of Debt to Income
If you have an existing mortgage loan, you might be living with the assumption that getting a new loan won’t be difficult for you. But not only has lenders increased credit scores bar, but they are as well now stricter with the ratio of debt to income.
Whereas some factors like a stable and long job, substantial savings, and high-income history can help you to easily qualify for loans, lenders often want the housing payment of every month to be less than a maximum of 28 – 30% of your income every month. They don’t want the overall debt-to-income to exceed 36%.
Mortgage Refinance Victoria