With a home loan it’s easy to just ‘set and forget’. But it’s sensible to review your home loan every two to three years.
We’re living in a world of rapid change, where interest rates go up and down fast, new lenders emerge and more competitive lending products become available on a regular basis. Under these circumstances, keeping the same home loan for 30 years could cost you more money than you need to spend!
In this article, we provide a step-by-step guide to refinancing your home so you can understand the process and see how easy and valuable it can be.
Before we get into that, let us clear up a few common questions about refinancing.
Why should you consider refinancing?
Generally speaking, there are four main reasons to consider refinancing.
- Your loan may be outdated and you could potentially get a lower interest rate.
- Different home loan features could work better for you.
- Your financial situation may have changed.
- You want to access some of the equity you’ve built up in your home to use for many things, such as paying schools fees, renovating your home or perhaps going on holiday.
Who should you use to refinance?
You should always talk to a mortgage broker because our opinion is not biased towards any particular lender or product. And we won’t suggest that you refinance if it isn’t the right move for you.
How do you refinance?
We’ve explained the when, who and what of refinancing, but what’s the actual process involved? Here’s a simple step-by-step guide.
Step 1: Speak to us
For us, we do not refinance your home loan unless it puts you in a better financial position and/or helps you achieve your goals more effectively.
We begin the process by taking the time to understand where you’re at now and what you’d like to achieve. Over a two or three year period a lot can change both for you as well as in the loan market.
Step 2: Choose your mortgage and apply
We’ll conduct an analysis to compare your current loan with new loan products and run scenarios to identify if there is a better option for you. It is our role to help you find the right product to fit your personal financial circumstances and goals.
If you’re comfortable and happy with the new option, then we will help you proceed to the next stage by submitting your loan application.
Step 3: Your new lender will perform a valuation
Your new home loan provider will require a valuation on your property as part of the application process. We manage this on your behalf and will provide you with a report on your property valuation.
Step 4: Get approved
Once the valuation has been completed and we have all of the documents required by the lender, your loan moves through the approval process. Depending on the lender this can take up to one week for approval.
Step 5: Your old mortgage will be closed
Your new lender will contact your previous provider to co-ordinate your refinancing arrangement. The lender will submit a ‘discharge of mortgage’ form to the Land Titles Office in your state or territory to close your old mortgage account.
Upon settlement, your new lender will pay out your existing lender with funds from your new home loan and take ownership of your property title. If you’re refinancing to consolidate other debts, they will be closed too.
Step 6: You start afresh!
You now have a new home loan that is more suitable and attractive based on your current circumstances. We often get feedback that it feels good to know that you’re not paying too much for your home loan.
As a valued client of ours, we have a full time dedicated Client Services Manager to help you with your mortgage needs for the duration of your loan. It is part of our client service offering to manage your loan, answer any of your questions, ensure everything is working for you and liaise with the banks on your behalf.
We hope you’ll find this guide to refinancing handy, and we would love to help you decide whether refinancing is the right step for you financially. Whether you are looking to refinance for a better interest rate, to access equity, consolidate debt or for a property investment to build wealth for your future, we can help you.