With interest rates once again at historic lows, and a busy 12 months in the property space, we're getting a lot of enquiries from existing and new clients who are considering a refinance of their home loan.
Firstly - what's a refinance?
Unlike a Re-fix - which is simply choosing a new rate and time period on your existing home loan, a refinance is effectively switching banks - either for a slightly better rate or situation, a bank which suits your needs, or perhaps some cashback offered by the new bank to switch.
How do I know if a refinance is right for me?
There are a couple of things to consider when looking at refinancing, and the majority of these are around how your situation might have changed since you purchased your home and whether another lender might now be a better fit
- What rates have been offered at your current bank? Are they comparable to the market? We can look into this relatively easy for you and ensure we've covered this first
- What could another lender offer me? We're seeing "deals" across all the banks everyday, so we can give you a fairly good idea of what might be out there and how it might benefit you
- Have I been with my current bank for 3 years or more? Often banks will have a clause in their original cashback offers which states you need to stick with them for 3 years. We can find out if there would be any cashback repayable if you did change lenders
- Do I need to borrow more money? Sometimes a new bank will allow you to borrow a bit more for renovations, a new car or another property. This can vary across lenders quite significantly so we can provide you other options
- Has your income or family situation changed? This can also often mean a change in lenders might be a good idea. Different banks have different policy requirements
- Did you pay a higher rate several years ago if you had a lower deposit? This is a really big one and especially in today's market a lot of borrowers have had significant increases in property values. This can mean we can negotiate a better rate for you
What's involved in a refinance?
We'll look at your current situation and confirm if you're a good fit for a refinance to another bank. From there we ask for application information (similar to that of your original application) and we'' approach the lenders we think will be a good fit.
From there we confirm the new loan structure and meet any conditions, and get in touch with your lawyer, who will need to re-register the mortgage on the new property.
Usually settlement day will be 10 days later and in that time the new bank will be in touch to set up new accounts. It's a simple process and we manage it all for you.
If you think a refinance might be a good fit for you, get in touch with us. We can give some specific advice for your situation and help you make a plan for your future.