Refinancing Your Home Loan

Thinking of refinancing your home loan?

The thought of refinancing can be a bit daunting, but never fear. We’ll walk you through it step by step so you know what to look for and what to expect.

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Step 1

Why refinance a home loan?

When you first take out a home loan, it’s often on a 25 or 30 year term. But think about all the changes that happen in your life during that time? Families grow, kids move out and the economy changes. It’s only natural that at some point, you’re going to outgrow your home loan.

Key reasons people refinance:

  • Money to renovate
  • Lock in a better interest rate or get more features
  • Buying an investment property
  • Consolidate debts like car loans and credit card
  • Changes to a relationship
  • Use the equity of your home to invest elsewhere
What to consider when reviewing rates
Refinancing means you take out a new home loan, with a new term and new interest rate and pay out and close your old home loan. Because you can re-mortgage for up to 80% of your home’s value (without paying lenders insurance), you can take out more money on your new loan and use it for other expenses or investments.
The term refers to a loan that appears to give a very low interest rate but upon reading the fine print, the rate increases significantly after a specific time period (say,12 months).

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Step 2

What should you consider when refinancing your home?

The most important thing is to take your time and consider your options. At the end of the day, you are taking out a home loan. While it may not be surrounded by the excitement of purchasing a new home, it’s still the same ongoing commitment.

1. Determine what you want

You can either:

  • Amount: Do you just want the same amount as your current loan, or do you want some extra money? Work out what you owe and what your home is worth to get a guide on your borrowing power.
  • Term: Do you want to continue where you left off or do you want to extend to a longer term to keep your repayments low?
  • Features: What extra features are important to you – like offset or redraw facilities?

2. Imagine the new loan in play

Your financial situation may have changed since you took out your original home loan. And, if you’re using the equity in your home for another investment property, these new repayments will affect your everyday cash flow too.

Do some sums to see how your refinancing will affect your lifestyle in the short term and in the long term.

3. Know the associated fees

When you refinance your home loan there will be fees involved both in closing off your previous loan and with taking out a new loan. Make sure that the costs of refinancing don’t outweigh the benefits.

Fees may include:

  • Settlement fee
  • Loan establishment fee
  • Mortgage registration
  • Loan service
  • Exit fees and charges
Fast FAQ

Every lender has an interest rate as well as a few fees such as establishment fees or monthly fees. A low interest rate may be countered by high fees. So you can compare ‘apples’ with ‘apples’, comparison rates give you a better idea of the true cost of the loan, factoring in fees to standardise the offer.

Step 3

What is the best loan for me?

Keep in mind the reason you are refinancing and your list of ‘wants’. If you’re refinancing because you’re short on cash, you might like an option with lower repayments. If you had key features in mind, look for loans that offer these. Take your time and get it right. If you find it a bit overwhelming, make an appointment with a CUA Mobile Banker or pop into a branch.

Things to consider
Generally speaking, there can be higher costs associated with paying out a fixed rate loan early. That’s why we encourage customers to closely weigh up the costs versus benefits of refinancing and decide if it is the best option. If you want to refinance to renovate, a personal loan may meet your needs with lower fees.

Which home loan suits me?

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Will this be your primary place of residence?
Do you want a fixed or variable rate?
Do you require an offset facility?
Do you require a redraw facility?

Your results

Max LVRΔ
Fixed/variable
Interest rate
Comparison rate*

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Important information Important information Show content

This is only intended as a general guide in relation to issues you may want to consider. 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 legal advice where needed, before proceeding.

Rates current as at 7 November 2018 and subject to change.

Loans are issued by Credit Union Australia Ltd ABN 44 087 650 959 AFSL and Australian Credit License 238317 to approved applicants only. Lending criteria, terms, conditions, fees and charges apply. Ask us for details.

The "Choose your own CUA home loan" tool is an indication only. Results do not represent pre-qualification for a home loan.

* Comparison rate calculated on a $150,000 secured loan over a term of 25 years based on monthly repayments. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

# On expiration of the fixed period, loan reverts to the relevant Standard Variable Principal & Interest repayment rate.

Δ Maximum Loan to Value Ratio (LVR) is inclusive of Lenders Mortgage Insurance (LMI) where applicable. Maximums based on standard security. Lower LVR limits apply for non-standard security types.

>< Offset is not available on all home loan products. You must maintain a minimum balance of $500 in each offset account to obtain the benefit of the offset from that account. Your offset account will not earn any interest.

>| A $200 minimum withdrawal amount applies for redraws conducted in-branch.

>> A daily transfer will refund any amounts paid in advance in excess of the total advance repayments allowed during the fixed rate period (being $50,000 for Premium Fixed and $5,000 for Fixed) unless sufficient to pay out the loan in full (in which case an Early Payout Fee may apply). Excess funds will be transferred to the nominated deposit account, which must remain open for the fixed rate period.

>|> For Premium Fixed Home Loans, any amount in excess of $50,000 in offset accounts will not be taken into account when calculating interest.

1 Achieve Variable is available to new to CUA home loans only. Minimum loan amount $100,000. Not available for switching or restructuring of existing CUA home loans or to applicants for another CUA home loan fully approved prior to 7/11/2018. Maximum LVR limits apply based on standard security types. Published interest rates and discounts available and applicable to home loans submitted on or after 7/11/2018. Interest rates and discounts may vary by loan purpose (owner occupied and investment) and by repayment type (principal and interest, interest only and construction loans). The discounts specified in your loan contract will not change for the life of the loan provided you do not vary your loan contract. If you vary your loan (for example, changing the loan purpose or repayment type), the rates and discounts may change.

2 Available to new loans of $100,000 or more. Maximum LVR limits apply based on standard security types. New loans only. Offers not available for switching of existing CUA home loans or to applicants for another CUA home loan fully approved prior to 04/07/2018 . Rates vary by repayment type (principal and interest vs interest only) and construction loans.

3 You must maintain a minimum balance of $500 in each offset account to obtain an offset benefit. The maximum in your offset accounts that is able to be offset against your Achieve Variable home loan when calculating interest is $15,000. Offset account balances in excess of $15,000 will not be taken into account when calculating interest on your loan. You will also not receive any interest on the funds in your offset accounts.

4 Loan Establishment fee of $600 waived for new Fresh Start Basic Variable Owner Occupier applications applied from 18 Jul 2017 until offer withdrawn. Security administration fee and other fees may apply.