Refinancing is the process of moving your home loan from one lender to another.
Throughout the process of taking out a mortgage with a new lender, there are multiple different loan products to choose from. To understand all the different loan products with each individual lender, you need to conduct thorough research.
In this post, we provide a step-by-step guide of how to refinance your home loan, the benefits of refinancing, and how to make the process as smooth as possible.
Before you consider how to refinance your home loan, it’s important to establish why you want to do so. Some of the main reasons to refinance your home loan include:
First, assess your current situation to determine whether a new home loan is feasible and will benefit you. It is important that refinancing your loan is in your best interest.
Situations from which you could benefit from refinancing your home loan include:
Next, research the available home loan options to determine how much you could save by refinancing.
The first way to determine your refinancing options is to go directly to lenders. Learning directly from the lender and doing it yourself takes a significant amount of time. However, it has the advantage of dealing with them directly.
Alternatively, you could consult a mortgage broker to assist you with a review of your home loan; they’ll present you with various options based on your requirements and financial situation. Additionally, they’ll guide you through the application process: helping you gather the required documents and complete the paperwork correctly.
See more: Mortgage broker vs. Bank
There are several things to consider when calculating your potential savings from refinancing your home loan.
To assess your application, the lender will require the following details and documentation.
Having these documents prepared helps the application process go smoothly, while delayed, inaccurate, or incomplete information can stall your loan’s approval.
Once you’ve found the loan product that best suits your needs, it’s time to submit your application.
Your new lender will evaluate your application along with all the supporting documentation. They’ll also conduct a credit record check, with a particular interest in your repayment history, and a property valuation to determine how much your home is worth. The lender may give you pre-approval before completing the valuation process. They will then provide final approval after calculating the value of your home.
It’s crucial to fully understand the terms of your new home loan before submitting your application. Subsequently, this is where working with a mortgage broker is most helpful, as they’ll clearly explain the loan terms to you. Alternatively, you can seek advice from your property lawyer or financial advisor.
Once your application is approved, you’ll be sent a letter of offer, contract, and documentation that sets out the terms of your mortgage. After carefully reading them, signing them and returning them to the lender, they’ll contact your previous lender to transfer your mortgage. The home loan refinancing process is now complete, with you making repayments on your new mortgage.
In most cases it takes approx. 4-6 weeks to refinance your home loan, with a month being average. The speed with which your application is processed is determined by:
Subsequently, the best way to refinance your mortgage quickly is to provide all the required paperwork and ensure it’s error-free.
No rule stipulates how often you can refinance your home loan: it just has to make financial sense. With that in mind, consider the following:
To learn more about how to refinance your home loan, schedule a consultation with one of our team of specialists at K Partners – top ranked mortgage broker in Melbourne. We’ve advised thousands of clients on the best way to refinance their mortgage to most improve their financial situation.
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Please note that all the while the information provided above is factual in nature, it’s also intended to apply generally, and to a broad audience. Subsequently, the information hasn’t taken your personal circumstances or goals into consideration.