Are you looking for a better interest rate to lower your repayments? Are you planning to buy an investment property or finally considering the renovation you’ve always dreamed of? Well, refinancing might be the answer you were seeking to bulldoze your hindrances.
We compare hundreds of loans from a wide variety of lenders and work with you to find the right loan that suits your individual needs.
Referred by some as ‘loan switching’, refinancing is basically a process of paying out your current home loan by taking out a new loan. This can be done with a new loan from your existing lender or through a different lender.
Refinancing is usually good for those individuals who you find their previous loan not feasible enough for their changed circumstances.
With refinancing, you can access additional home loan features such as:
When you pay off your loan early, say in the first 3-5 years, then exit fees is applicable. It is either a percentage of the loan balance or a fixed amount.
During refinancing, the new lenders often charge a range of upfront fees which include:
LMI is paid by the borrower to insure the lender of any risks that may be associated in case the borrower defaults in his repayments. If you are borrowing 80% or more of your property’s value, then LMI would be applicable to you. Also, LMI is a non-transferable payment, which means that if you refinance you’ll have to pay LMI again.
Stamp duty is the tax charged by the state government on your mortgage and is calculated against your loan amount. If refinancing increases the size of your home loan, you will have to pay stamp duty.
Mortgage registration fee is paid for registering your loan onto the property’s title record to the Land Titles Office or equivalent.
The process of refinancing a loan is very similar to the process of applying a home loan. Still, here are the following steps that usually people follow:
Explore the costs, fees or penalties that you might have to pay to your current lender, such as deferred establishment fees (DEF) if you choose a different lender.
Evaluate your motivation behind refinancing a loan- is it because you are looking for a lower interest rate, accessing equity for emergency cash needs, wanting to switch to a different loan with better product features or consolidate your debts?
Create a ‘shopping list’ of the features you want and then choose a loan that fits all or most of these features. You can take help from a mortgage broker to discuss your options.
The approval process is going to be very similar to your previous loan process unless you’re going for a different lender, in which case you’ll need to provide the following paperwork:
Valuation of your current properties will be done by the new lender and it is often chargeable, anything between $200 and $300.
At this point, your lender gives you a formal or unconditional finance approval and will instruct a solicitor to prepare the loan documents on their behalf and get them approved and signed by you.
Your new lender will settle your previous loan with your previous lender for establishing a new loan. Once this process is done, you have a brand new loan!
When refinancing your loan for any reason, it pays to do your homework. Our mortgage brokers will:
