If you’re paying high-interest rates on your mortgage, you might be asking yourself - how do I refinance my home loan?
Refinancing is a simple yet effective way to save money on your mortgage repayments and pay off your home loan faster than before. All you need to do is enquire online and find more attractive home loan offers from a different provider. In this refinancing guide, we’ll go through everything you need to know to successfully reduce your mortgage interest rates - from the stages of refinancing to how long it will take to complete.
Let’s get to the following commonly asked questions:
The process of refinancing refers to when you revise and replace your credit agreement. Refinancing usually occurs on a home loan or personal loan and is done to improve the terms of the loan repayment agreement, whether it’s the variable rate or the payment due dates.
Refinancing your home loan is an incredibly effective way of saving money since you can amend your current home loan to lower the interest rates you pay every month.
Note: If your loan approval happened when interest rates were high, compare home loan options and see whether you can use refinancing to get a lower interest rate on your mortgage.
Are you ready to reap the benefits of refinancing your home? Here are the four stages of the refinancing process, from research to settlement day.
If your current lender is charging high-interest rates, it’s time to go back to the drawing board and research and compare home loans on offer. Other lenders will offer a lower home loan interest rate to bring in new customers, and you should take advantage of this to save significant cash.
Before you start considering refinancing options, it’s essential to talk to your current loan lender. They will not only be able to give you your filed information which will speed up the process of refinancing but may also offer you a more attractive mortgage rate if you threaten to move providers.
Your refinancing application is easy if you have the correct documents from your current loan provider. Some examples include your proof of income, contents insurance, proof of identity, credit score information, and debt statements.
Within three days of submitting your refinance application, you should receive a loan estimate. This doesn’t classify as a loan preapproval but highlights the estimated interest rate, monthly mortgage repayment amount, and closing costs.
After you’ve accepted the terms of the new loan, it’s time to accept the terms and switch from your current mortgage to your new refinanced home loan.
Note: The settlement process should only take a couple of hours as your new lender goes over the contract and approves the terms and conditions.
If you want to refinance your mortgage, you’ll probably feel concerned about how hard it is to secure a new loan. Luckily, taking the steps to refinance your home is far less complicated than the home buying process, despite it including similar steps.
Refinancing is only difficult if you:
The time it takes to refinance your home loan depends on how quickly you submit the correct information to your loan provider. In Australia, it typically takes between two days and six weeks to reach the refinance settlement date. However, it will depend on the lenders' terms of service.
Important: Be aware that appraisals and inspections can delay the refinancing process.
On settlement day, your new mortgage provider will receive the deeds to your home held by your existing lender, and your preexisting loan will be paid out. It’s really that simple. After settlement, you’ve officially refinanced your home loan. Congratulations!
If you want to improve your financial situation, refinancing your home loan is an easy way to save money and pay less interest on your monthly mortgage repayments. If you submit the correct documents, the process can be quick and simple and is far less stressful than moving house or applying for a new mortgage.
If you’re not interested in refinancing but want help with debt consolidation, we would recommend monitoring your bank accounts to understand your spending habits better. Depending on your situation, you could take out a balance transfer credit card to pay off your debts quicker, apply for a personal loan, or take out a debt consolidation loan.
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Disclaimer: The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.