Home Loan, refinancing

What is the Refinancing Process?

Refinancing home loans in Sydney could be a good way of getting a better deal, paying less interest, consolidating several loans or accessing new loan features. Refinancing homes means replacing your existing mortgage with a new one. Applying to refinance is a similar process to the one you undertook when you initially financed your property, and it’s one that an experienced mortgage broker, like Loan Station, can help you with

Identify your goals

Refinancing homes can be a great way to reconsider your financial goals. You may find that your circumstances have changed and you are now able to pay more into your mortgage. Or the opposite: you would like to cut down your repayments.

Before you begin the process, you should know why you are doing it. You may be looking to find a better interest rate or extend your loan term so you can lower your monthly repayments. Some homeowners want to access equity from their mortgage, so they can pay for home renovations or buy an investment property. Your fixed-rate term may have ended and you want to refinance the remainder of the loan or explore switching to a lower variable rate.

When looking for the best home loan refinance options, you should take into account how much you can afford. If you are looking to increase your loan, make sure you can afford the higher repayments.

Review Your Current Financial Status

Before you start the refinancing process, you should check your current mortgage’s rates, terms, remaining balance and any fees that may apply to refinancing or early exit.

At this time, you should also consider getting a credit report. Your prospective lender will be doing this so it is recommended you check before them, to uncover and fix any potential mistakes.

Fees Involved When Refinancing

Refinancing homes can incur costs. To switch between lenders may involve legal or application fees. You may also be required to pay discharge fees from your current lender. When reviewing your finances, you should take these fees into account.

Consult an Expert

Setting up a meeting with a mortgage broker like Loan Station can help narrow down your options. A mortgage broker will be able to explain the pros and cons of the different rates you have been offered. They will also try to find the best home loan finance option to suit your financial needs.

Particularly for refinancing homes, using a mortgage broker can shed light on complicated fee structures and help simplify the process for you.

Compare Home Loan Options

You should research different lenders and what their options are. Each lender offers various products with different terms and rates. You should also consider both traditional and non-bank lenders.

It is important to remember that the best home loan refinance option won’t always be the cheapest rate. This is why it is important to compare all factors including fees, term length and additional features like an offset account.

Sort Out Your Paperwork

Luckily, this is not your first application so you already know most of the drill. Refinancing homes is very similar to your initial application and you will require many of the same documents. This can include:

  • Proof of identity
  • Proof of income and earnings
  • Bank statements
  • Breakdown of expenses
  • Proof of assets and liabilities

In addition, you will need the details of your current loan and the property. This may require your new lender doing a valuation to assess the value of the property. If this is the case, you can consider doing minor repairs or upgrades to increase the value of the property. A higher-valued property can affect how much equity you have.

Once you have found the best home loan finance for you and have completed your paperwork, your lender may issue pre-approval. This will give you an idea of how much the lender is willing to give you and how much your monthly payments will be.

Get Loan Approval and Settle Your Loan

After the lender is satisfied that you meet all the requirements, your loan will be approved. Your broker and new lender will liaise with your previous lender. They will usually let the old lender know that you have refinanced, which initiates discharge proceedings. Then, your new lender will arrange to pay out your existing loan. After that has been settled, you will stop paying your previous lender and begin paying your new loan.

The final word on refinancing home loans in Sydney

Refinancing home loans in Sydney can be a strategic financial move, offering potential benefits such as reduced rates, loan consolidation or access to new features. But, there are many different ways to refinance your home so it is important you consider all options carefully.

The key is to start by reviewing your financial status so that you begin the process with the full picture. Then, using an expert mortgage broker to guide you, you can compare loans, gather documents and apply. Following these steps to refinance a home loan in Sydney can help meet your financial goals.

Looking to refinance home loans in Sydney? Contact Loan Station by filling in this form or emailing us at info@loanstation.com.au.

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