Considering refinancing is a great opportunity to secure a better interest rate to your existing home loan. It can be a bit of a process, so it's best to understand a little more before jumping in... having said that, it is often well worth the hoops!
Here's a step-by-step guide to get your refinancing sorted:
Step 1: Understand the need to refinance and the most common reasons for refinancing:
Knowing your 'why' makes it easier to find a new loan that fits you best.
Step 2: Home loan options comparison
When considering refinancing, you want to make sure you're shifting to the best new loan for the reasons that are most important to you. Make sure to seek guidance and direction in terms of the rate and features to ensure you have considered all of the important elements. You can speak with a mortgage broker, talk to lenders, or check out some comparison sites to be sure you're comfortable with your choice before you apply or transfer your home loan.
Make sure to seek details regarding the conditions of your loan, features added and removed, or how long the settlement will take when refinancing.
Step 3: Crunch the numbers
Refinancing comes with a variety of costs. There are upfront fees to the new loan, exit fees to the old loan, and mortgage registration fees to the government, and they all need to be considered into the viability and feasibility of the proposed changes.
Keep in mind that your new loan term will likely start all over again. Make sure to calculate exactly the amount of interest you can expect with your new loan and compare with your current loan to know if it's worth it to refinance.
Once you have all the figures, sum it all up to be sure that refinancing outweighs all costs.
Step 4: Applying for a new loan
Refinancing your existing loan will mean completing paperwork just like your current loan. You will need to provide a proof of income such as payslips and your IDs.
Step 5: Valuation
Make sure you understand how the valuation works because in refinancing, the new lender will want to value your home. Make sure to spruce things up before assessment as there are lots of small things you can do to maximise your property's market value.
Step 6: Loan approval
Formal loan documents will be drafted and forwarded to you for signing once your application is approved. Be keen and read the paperwork carefully and don't hesitate to speak with your mortgage broker if you have any questions, they'd love to chat!
Step 7: Settlement
On the settlement day, your new lender will receive the title deeds to your home, which was previously held by your old lender.
All you have to do is enjoy your new loan! With these refinancing tips, you could be in your new loan within 4 to 6 weeks!
Interested to know more about refinancing and don't want to worry about all the finer detail, and want an expert to look after it all at no cost to you? Feel free to reach out, book a meeting and let's chat, it's what we are good at(because I am home all the time... and I miss people, any excuse will do!)
Rachael Bland – Founder & CEO