Refinancing
your home loan
What is refinancing?
Refinancing is the concept of replacing your current loan with a new loan based on your financial situation. Our Loan Location home loan specialist will assess and recommend suitable products to benefit from refinancing from one bank to another.
Why should I refinance?
A home loan should be reviewed every 2 years to compare against the current home loan market and ensure you are getting the best product to suit your needs.
There are a number of reasons why you should consider refinancing your home loan:
– To get a more competitive interest rate or change loan product to suit your current scenario such as shorter loan term, access to an offset account or redraw facilities.
– Drawdown on your equity to renovate or invest
– Coming to the end of a fixed term and need to find the next competitve product
– Take control of your debt by consolidating into your home loan at a lower rate
Things to consider
When refinancing your home loan there a number of things to consider to ensure that you are not in a worse off position. Factors such as:
Exit Fees
When you are choosing to exit from one bank you will need to consider any exit fees or break fees as this will impact your decision in refinancing to another bank. Break fees may be applicable when you are choosing to break a fixed term loan.
New Loan Fees
When choosing a new loan product you need to consider any new application costs such as establishment fees, monthly fees, any settlement fees. These fees will determine if it is financially worthwhile to switch from your existing home loan to a new one.
Lenders Mortgage Insurance
When switching to a new home loan you will need to consider if there is enough equity in your home to avoid paying for lenders mortgage insurance (LMI). Sometimes your home may not have increased in value to bring the loan to value ratio (LVR) below 80%. If your loan amount is more than 80% LVR than you will need to pay LMI again which will be a great disadvantage to refinance.
The Refinance Process
CONTACT YOUR BROKER
First point of contact is your broker. If you dont have a broker, get in contact with one of our home loan specialist today.
ASSESSING YOUR
CURRENT SITUATION
Your broker will ask you questions regarding your current position. Things such as starting a new job, having a new addition to the family or you took out a personal loan 6 months ago can affect the ability to refinance. This is where your broker will assess your overall position and determine if its the right time to refinance.
RESEARCHING REFINANCE OPTIONS
Once your broker has determined that it is worthwhile refinancing your current home loan, your broker will research options that meet your new requirements and objectives. This could result in a better interest rate which means saving interest over the remaining loan term or simply switching from a variable rate to a fixed rate to help budget your mortgage repayments along with other living expenses.
APPLY FOR APPROVAL
Once you are happy with the recommendation provided by your broker, your broker will organise the relevant paperwork to put the wheels in motion and apply for the new home loan.
DISCHARGE FROM
CURRENT BANK
As part of the refinance process you will need to sign a discharge form to be able to move from one bank to another bank. Your broker will help you organise this.
SETTLEMENT
Your broker will ensure a smooth settlement between the two banks. All you need to do is wait for the transfer to happen.
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GENERAL ADVICE WARNING
Any advice contained in this website is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice in regard to those matters.
