How to refinance your home loan

There are many reasons you might consider refinancing your home loan. It gives you a way to get a lower rate with another lender. In many cases, it may give you access to additional features and benefits, such as an offset account. Some providers also offer incentives such as cash back into your account simply for switching your home loan from another bank.

Refinancing can be simpler than buying a new property as you don’t need a solicitor for conveyancing. You don’t need pest and building inspections or strata reports, as you already know the property you’re dealing with.

Whether you’re just beginning to think about refinancing or you’re ready to start your application, we’re here to help. Here’s a basic outline of how the process works.

It’s also important to note that refinancing is different to increasing your home loan balance with a top-up.

Step 1. Work out what it could cost to exit your loan

Before you start researching, it’s a good idea to figure out what it’s going to cost to exit your current loan.

There are two key costs involved in ending a home loan early. Most home lenders will charge an exit fee to close your loan. If you have a fixed interest rate, some lenders will also charge a break cost that will vary depending on how long is left on the fixed part of your loan. Break costs allow lenders to make back some of the profit lost in interest charges when you leave before you reach the end of the fixed rate loan term.

Take a look at your current interest rate – is it variable or fixed? Have you fixed part of your loan and left the rest on a variable rate? If you have a fixed rate on part or all of your loan, it’s likely your lender will charge you a break cost on top of an exit fee to close the account. Break costs are calculated based on the balance of your fixed interest rate loan, as well as the number of years left on the term in your fixed loan contract. On the other hand, leaving a variable rate loan may only involve an exit fee.

The good news is even if there are exit fees and break costs, you could still save in the long run with the right refinancing options. If you’re aiming for a lower interest rate, take some time to calculate how much interest you could save over the term of a new loan. Also look into cost-saving features, such as offset accounts, which allow you to use your savings to reduce the interest you pay.

You can get an idea of the fees your lender will charge you by reviewing the terms and conditions for your current home loan.

Step 2. Get your details together

Refinancing a home loan is definitely simpler than applying for a new one, but there are a few things we’ll need before we can get your application rolling.

It’s really important that you can show a good history of consistent repayments on your current home loan and any other credit card or personal loan accounts. We will also need to see statements for any debts that you want to roll into your new loan when you refinance.

Refinancing may give the opportunity to access extra funds, too – make sure you know what the purpose is and are ready to provide details to us during the application.

Finally, we’ll need to see recent payslips and bank statements showing your expenses, so have these ready before you apply.

Step 3. Tell us what your goals are

Do your research and figure out what you need from a home loan with us – a home lending specialist will be able to answer any questions you have via live chat once you start your application online.

You may already have an idea of what you’re after – you want a lower interest rate, to fix your rate, or switch to interest-only repayments. Maybe you want a loan with additional features such as a linked offset account. You could be after funds to consolidate or pay off debts such as credit cards or personal loans. Perhaps you want to free up equity to have extra cash or invest in new properties. Or maybe you’re not sure what you’re looking for and need some expert direction.

Taking your needs into account, our home lending specialist can present you with different options that’ll show you how the right loan could potentially save you money, cut years off your loan term and build equity in your home faster.

Step 4. Start your application online

Once you’ve selected the right home loan, we can help you with the application process – simply click apply online and follow the prompts.

Applying for a new loan can seem daunting, but we’re here to help guide you through it. If you’re not sure which type of home loan you’re after, you can talk to a home lending specialist in the application using live chat or over the phone.

Step 5. Take care of the paperwork – documentation, valuation and approval

We’ll need you to upload some documents as part of your application. These will include your ID, payslips and 6 months of existing home loan statements.

Once we’ve received your details and documents, we’ll start to process your application. This involves a few steps. First up, as responsible lenders, we’ll talk to you about what you’re aiming to do with your property and make sure you have a loan to suit your needs. Then, we’ll make sure your application meets our lending criteria. If that stacks up, we’ll verify your documents and arrange to value your home.

When valuing a property for refinance, we’ll look at its sales history and the current sales trends of similar places in the suburb and surrounding area. The condition of the property and any renovations or additions will also play into our valuation.

There are a couple of different processes we follow valuing a home for refinance. We may be able to do this entirely online with the information you send us. Alternatively, we might send a valuer out to check out your property and assess it in person. The whole valuation process rarely takes longer than a week to two – an online or ‘desktop’ valuation can be much quicker.

Once we’re done, we’ll be in touch to let you know the outcome and details of the new loan we could offer you. If your refinance has been approved, we’ll issue you with a letter of offer. You’ll need to sign this and get it back to us – the sooner the better. Once we’ve received it, we’ll be able to start the settlement process.

Step 6. Settle your loan

Just like when you first bought your home, settlement is the day when your existing mortgage is paid out.

We’ll do most of the heavy lifting for you. We’ll meet with your old lender, pay out your previous mortgage, arrange for titles to be exchanged and register a new mortgage over your property. We’ll make sure your accounts are set up correctly and all funds go where they need to. Your home lending specialist will also let you know your first repayment amount and when it’s due.

Once this is done – it’s congratulations! You’ve successfully refinanced and can begin to enjoy the benefits.

How long does settlement take?

If your loan qualifies for FastRefi, your whole refinance application could be wrapped up within a week.

FastRefi is a process that allows us to complete your home loan refinance with no attended settlement – this means a refinance can occur within days, not weeks when compared to the standard refinance process.