When did you last check the status of your mortgage?
Perhaps you’ve been making repayments for several years and are now wondering if you’ve built enough equity to fund a major renovation project. Or maybe you have seen interest rates advertised at historically low rates.
Whatever your reason, a home loan refinance could be a good idea as you can benefit in the following ways:
- Get a lower interest rate and save money on monthly repayments.
- Consolidate all debts into a single home loan.
- Access home equity to achieve your personal goals, invest in another property or start your renovation project.
- Enjoy new or better loan features.
- Switch between variable and fixed rates.
But how do you refinance a home loan? How long does it take to refinance a home loan?
Here, we’ll talk about the basics of refinancing a home loan and answer the above questions.
What is a home loan refinance?
The process of home loan refinancing entails working out a better arrangement with your current financial institution – this is best done through a mortgage broker who has a legal duty to work in your best interests.
It can also mean using a mortgage refinance broker to take out a new home loan with a lower interest rate offered by your existing lender or a new bank or other financial institution.
What are the steps in home loan refinancing?
Although the process isn’t complicated, there are several steps involved in refinancing home loans in Australia.
Step 1: Identify your goals.
People have different reasons for wanting to refinance a home loan. Whatever your goal, let your mortgage refinance broker know so we can advise you on the best products to consider for refinancing.
Step 2: Make the necessary calculations.
Make sure you have a handle on your current financial situation and how you’ll benefit from refinancing your home loan. Consider certain factors like your current interest rate, how long you still need to make repayments and when you last refinanced. Also, don’t forget to consider all the fees or expenses associated with refinancing. Your experienced mortgage broker can help you with all the calculations you need for a hassle-free assessment of your refinancing ability.
Step 3: Compare home loans.
Once you’ve resolved to refinance, you can start comparing home loans or refinancing offers. An expert mortgage broker will recommend loan products that are suitable to your current circumstances. Aside from comparing the interest rates of various products, you should also reflect on your refinancing goals to keep you on the right track.
Step 4: Select and apply for a new home loan.
Take the hassle out of refinancing and trying to compare all the options you can find online. Using an experienced mortgage broker means you know you are getting the best home loan product for you. We’ll do everything from comparing and explaining to submitting your application for you. Paperwork that you will need includes your last two payslips (employed) or tax returns (self-employed), bank statements and other items we will advise you need to send us.
Step 5: Be ready for a property valuation.
Lenders usually require a property valuation for new borrowers and ascertain whether the property has increased or decreased in value. A mortgage broker will arrange this for you.
Step 6: Get loan approval.
After checking to see if everything is in order and your application is approved, the lender will send you a mortgage contract package. Make sure you sign the mortgage contract and other loan documents and return those to your lender.
Step 7: Complete settlement.
The next step would see your new lender arranging to pay off your existing loan with your previous lender – or the existing loan if you are staying with the same lender. Once the settlement is final, you can begin making repayments on your new loan.
Well done!
Now that you’ve successfully refinanced your home loan, you can now start enjoying the benefits of refinancing.
Need some mortgage assistance? Top Drawer Finance Solutions offers customised lending services available right across Australia. Get in touch today!
