When it comes to life’s biggest decisions, changes and the financial commitments you’ve made, it’s a good idea to regularly review how things are going.
Your home loan is a good example. Is it working as hard as it could for you? Could you save by making a move? But for many people, the idea of going through the refinancing process is a big reason for putting it off. It’s not as complex as it may seem, though. This step by step guide explains what’s involved.
Do your research
If you’re thinking about refinancing, a quick online calculation or scan of the various lenders will give you a good idea if it’s going to be worth your while. Depending on why you’re refinancing you may want to look out for interest rates, fees and charges, extra home loan features or other benefits offered. Don’t forget to factor in the lender itself and the service you’ll get from them.
If your research suggests you may benefit by refinancing, then it’s time to…
Speak to your current lender
Before you jump head first into refinancing, it may be worth asking your current lender for a home loan health check based on your current needs and objectives. Needs change over time, so the older your home loan is, the more likely a review is going to help.
This is particularly true if you simply wish to refinance to a higher loan amount, to free up cash for a renovation for example. Your current lender may be able to arrange a deal for you so you don’t have to go through the full process of switching.
If this doesn’t work out, your next step would be…
Arrange a meeting with a new home loan specialist
If you’d like to move your home loan, the next step would be to arrange a chat with a home loan specialist at the new lender, or indeed a mortgage broker. This can happen in person at a branch, or over the phone. Some lenders will also have the option of using a mobile lender, a lending specialist that will schedule an appointment at a location and time that’s convenient to you. This can be really handy if traditional banking hours aren’t a good fit for your busy lifestyle.
- Why you want to refinance (this is important as it will help the new lender identify a home loan that best suits your needs)
- What are your current financial and life goals
- How much would you like to borrow (is it the same as your existing loan or a higher amount)
- How much you can safely borrow (they’ll ask you about your income, debts, assets, living expenses, value of your current property)
This initial no-obligation appointment can take about an hour and will allow you to explain:
When scheduling the appointment the lending specialist will let you know what important information to bring with you. For example, pay slips, bank statements, home loan statements, household budgets etc. This is particularly important if you’re moving to a new lender/bank as they’ll need this information to get to know you.
Based on the information you provide, the lender or broker will outline the different options available to you.
Then it’s up to you to…
Think about it and decide whether to progress
It’s important that you take the time to consider your options fully and how they may help you reach your goals and impact on your finances.
At this stage you may wish to consult with a financial advisor so you make as informed decision as possible.
If you decide to progress with the refinancing...
Submit an application to the new lender
The home loan specialist will help you complete an application and let you know which documents you need to submit. They’ll also arrange for a valuation of your property to be made, which will help decide whether the application is approved.
If the loan is approved…
Your new lender will contact your existing lender and arrange for ‘settlement’
With your permission, your new lender will contact your existing one to arrange for your loan with them to be closed. Most banks will take between 10 and 20 days to arrange for a loan to be closed (in this time they may contact you asking you to reconsider). They may also charge ‘pay out’ fees when you close your loan, although these are often rolled into the refinanced loan with your new lender amount, so you don’t pay anything up front.
You’ll then need to sign the new loan documents, and your new lender will make final arrangements for the property title and debt to be transferred to them.
The refinancing process from start to finish normally takes between 20 and 30 days.
Once it’s all done and dusted…
Your loan with your new lender commences
And you’re done! From here, your new schedule of repayments starts, and if you’re refinancing to a higher loan amount, any additional finance will be made available to you. At this point, you’ll also be able to use any extra benefits offered by your new bank, or additional products that are bundled with your loan, such as transaction or offset accounts.
Ready to get started? Speak to a CUA home loan specialist about your refinancing options.
Please note that this is only intended as a general guide in relation to issues you may want to consider when refinancing. It is not intended to be an exhaustive list of all relevant issues and you should take into account your own particular circumstances, and obtain independent expert advice where needed, before proceeding. Rates and savings quoted are indicative only for illustrative purposes.