We’ve had 12 interest rate rises over the last 13 months.
That’s 12 times your interest rate has increased on your home loan.
And 12 times your monthly loan repayment has increased.
(Actually, if we’re being technically correct here, the number of times your repayment has increased is likely to be slightly less than 12, because the last few rounds of rate hikes may not yet be reflected in your minimum monthly repayment.)
If you haven’t reached out for a home loan review lately, what’s stopping you?
Here are some of the most frequently asked questions we get about refinances.
How much can I save with a refinance?
The amount you could save by refinancing will depend on:
Interest Rate Differential: Often the primary factor in determining whether you will save by refinancing is the difference between your current interest rate and the new interest rate. A lower interest rate on your refinanced loan can lead to significant savings over the life of the loan.
Loan Balance: The remaining balance on your existing loan affects the potential savings. If you have a relatively large loan balance, even a small reduction in the interest rate can result in significant savings over the long-term.
Loan Term: Changing the loan term during a refinance can impact your monthly repayments and overall savings. Whilst resetting the loan term may lead to higher interest costs over the life of the loan, it can help to reduce the monthly repayment burden.
Lender fees: There may be costs associated with setting up your new loan (ie. application fees, settlement fees, government fees associated with registering the new mortgage on the title). It’s important to factor in these expenses to determine the net savings from refinancing – we can assist you with this.
Exit fees/ costs with your current lender: Depending on the type of loan you have, there may be prepayment penalties and/or exit fees that need to be considered when weighing up cost benefit of a refinance.
When we explore your lending options, we’ll take all of the above factors into account. If you’ve been with your current lender for a number of years and haven’t reviewed your loan over that time, there’s a very good chance your loan repayment is higher than it needs to be. We can help fix that.
What’s involved with a refinance?
Refinancing typically involved replacing your existing mortgage with a new loan from a new lender. The idea is to select a new loan/lender that provides a lower interest rate, reduced monthly repayments and/or offers additional benefits/ features you don’t already have in place with your current loan/lender.
Whilst there is a little bit of life-admin involved for you (i.e. you’ll need to provide us with your details and supporting documents), we’ll do most of the work.
We’ll compare all the options, negotiate better rates with new lenders, arrange the valuation, prepare the application paperwork, and then liaise with the new (and old) lender to get your new loan in place.
What information will the lender want to see?
Even though you already have a loan and have been making your repayments, refinancing requires a completely new assessment of your financial situation. This means you’ll need to provide all the normal things like payslips, bank statements and statements for your existing loans.
The new lender will also want to confirm the value of your current home, via a valuation. But we will arrange for this to be conducted as part of the process, at no cost to you.
Can I release extra funds to pay out my car loan/ personal loan?
Providing your current level of income will support a higher loan amount (in accordance with lender servicing metrics) and there’s sufficient equity in your property to take out a higher loan, then yes –there shouldn’t be any issues with you releasing funds to pay out a car loan.
However you need to be careful when doing this. If you don’t make additional repayments to your home loan to pay off the additional debt borrowed to clear the car loan, it can result in you paying back these funds over a longer period of time.
Can I release funds to renovate my kitchen?
Similarly to borrowing funds to pay out personal debt, this typically isn’t an issue. Especially if planned home improvements are non-structural.
That said, it does depend on the total amount you’re looking to release and the improvements you’re specifically looking to undertake. If you’re planning major structural works, most lenders would require you to apply for a progress draw loan instead – i.e. a loan where progress payments are to be drawn down in line with stages noted in the build/ renovation contract.
How long will the process take from start to finish?
The timeframe will depend on lender service levels, the complexity of your financial situation, valuer workloads, how long it takes for your existing lender to prepare your loans for discharge (the smaller lenders often take longer) and Australia Post delivery timeframes (should the chosen lender issue paper-based loan contracts). However, as a guide, the standard timeframe for a normal refinance can take 6-8 weeks.
What happens with my loan and savings accounts with my current lender?
Generally speaking, any savings/offset accounts you have with your old lender will remain open after settlement of the loan with your new lender. As such, all direct debit arrangements you have in place – and any credit cards – you hold with your old lender will also remain untouched. The only thing that tends to close on settlement of the refinance is the loan account. (There are a few lenders who are an exception to this).
Cash reserves will also remain in the transaction account you hold with your old lender, until such time you decide to move them over to your new lender after settlement.
How do I get started?
That’s an easy one! Just provide a few details here and we’ll be in touch shortly.
