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A step-by-step guide to refinancing

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If you've been thinking of refinancing, but don't know where to start, fret no more. Here's a comprehensive, step-by-step guide to refinancing your home loan.

When you refinance your home loan, you’re essentially replacing your old mortgage with a new one. Your new lender will pay off your current mortgage as they set you up with your home loan refinance. Your new home loan will have a different interest rate, loan term, and principal loan amount. 

If you’re interested in refinancing your home loan but don’t know where to start, you’ve come to the right place! In this comprehensive guide, we show you the ins and outs of refinancing your mortgage. 

Before applying for a home loan refinance 

Here’s what you need to consider before applying for a home loan refinance. 

Are you eligible for home loan refinance? 

First and foremost, you need to make sure you’re eligible to apply for a home loan refinance. Different lenders will have different refinancing eligibility requirements, but typically you’ll need to meet the following criteria:   

  • Be an Australian citizen or permanent resident  

  • Have more than 20% equity in your home, which will also help you avoid Lenders Mortgage Insurance  

  • Have a good or excellent credit score and history  

  • Be employed and have proof of income  

  • Be over 18 years old 

If you meet the eligibility requirements above, your next step is to gather the necessary documents. 

Requirements needed for home loan refinance 

Thinking about what you need to refinance your home loan? The documents and paperwork you need to put together when refinancing include: 

  • Personal details. You must give information about your family situation, relationship status, and number of dependents as this affects your income and expenses. 

  • Personal identification. You need to provide lenders with your ID (e.g., driver’s licence, passport, birth certificate, Medicare card). The ID you present must have your current address, date of birth, and contact details. 

  • Proof of income. Anything that documents your income like recent payslips, your most recent Group Certificate, your latest Tax Assessment Notice, or a letter from your employer that confirms your salary. 

  • Proof of employment. Provide your employer’s and/or accountant’s business details. For self-employed individuals, your lender may request two years of business and personal tax returns and Australian Taxation Office assessments as proof of your income. 

  • List of existing loans, expenses, and other liabilities. Copies of your most recent bills, credit card statements, bank statements, and other current expenses must be included in your home loan finance application. 

  • Current assets. This includes cash and savings, shares, vehicles, and high-end jewellery and art. These assets could help you repay your home loan. 

These documents are needed to make certain that you’re not only eligible for the refinance but can make regular repayments to your mortgage. Note that you may be required to provide supporting documents for your assets.  

Step-by-step guide to home loan refinancing 

If you've been thinking of refinancing, but don't know where to start, fret no more. Here's a comprehensive, step-by-step guide to refinancing your home loan. 

Step 1: Know why you’re refinancing 

Refinancing your home loan is a serious undertaking. Before you start the whole process, it’s best to know what you want out of it. People typically refinance their home loans to take advantage of lower interest rates, shorten mortgage terms, or consolidate debt.  

One of the most overwhelming parts of the home loan refinance process is choosing the best one. The right home loan refinance for you depends on your financial goals. Understanding why you’re refinancing helps narrow down your options to ensure a successful home loan switch.  

Step 2: Figure out if it makes financial sense 

Know how much a home loan refinance actually costs. Crunch the numbers to see if refinancing your home loan is worth it in the longer term. Refinancing a home loan involves several fees such as discharge fees, break fees, application fees, security assessment fees, settlement fees, title search fees, and ongoing lender fees just to name a few.  

Analyse your financial situation to figure out if the cost of refinancing can give you the savings you want or expect. Using loans.com.au’s home refinance calculator, work out how much you could save by switching mortgages. 

You also have to figure out how much equity your current property has. Refinancing a home loan usually requires an amount of equity to act as a deposit. If your equity is less than 20%, you might have to pay Lenders Mortgage Insurance (LMI). 

Step 3: Choose the best refinance solution 

Once you’ve got the basics covered, it’s time to search for the perfect home loan refinance. The best way to go about it is by comparing home loans to see which one best suits your needs. Carefully look over all the loans available to you. Check the comparison rates, loan terms, features, and the like.  

The secret to finding the perfect loan is taking your time. Don’t rush in without properly talking to the lender or lending specialist. Ask potential lenders questions so you’re better informed about the loan product. Refinancing your home loan is a serious decision so make sure you and your lender are on the same page. 

At loans.com.au, we offer highly competitive refinance home loans, with a wide range of features and flexibility. Our home loan specialists with years of experience are ready to help you through the process. Book an appointment or chat with us to discuss refinancing your home loan. 

Step 4: Apply for your new loan 

Once you’ve chosen your new home loan, it’s time to begin your application. Organise all the paperwork and refinance documents you need beforehand to avoid delays.  

With loans.com.au, the loan application process is completely online. Keep your home loan refinancing documents on hand to make the application process quicker and smoother. All you need to do is submit the paperwork through the onTrack application platform and wait for a response from the loans.com.au team. Because we’re a fast, entirely online lender, you waste no time switching from your current loan to a new one. 

Step 5: Prepare for a property valuation/security assessment 

When refinancing your home loan, most lenders will arrange for your property to be valued even if you already had one done for your first home loan. Spruce up your home’s exterior, make needed repairs, and do some small upgrades to help boost your home’s value.  

The latest property valuation may find that your home has increased or decreased in value, which can affect how much equity you have. 

Step 6: Receive loan approval 

Your lender will perform a credit assessment after inspecting your documents and your property has been valued. This is to ensure that you’re able to make your repayments. If you’re home loan refinance is approved, your lender will send a mortgage contract package which typically includes:  

  • Mortgage contracts  

  • Direct debit forms  

  • Terms and conditions booklets  

  • Discharge forms  

  • Mortgage of land forms 

At loans.com.au, you can handle most documents online. Simply sign the required contracts and forms, then return them to us. 

Step 7: Settlement 

Finally, when all the requirements have been submitted and reviewed, your new lender will arrange to pay out your existing loan. From that date, you no longer need to pay your now old lender interest, even if they take their time discharging the loan.  

When the settlement is complete, you officially start repayments to your new lender. When you refinance your home loan with loans.com.au, you can conveniently manage your repayments with the Smart Money app. 

How long does it take to refinance a home loan? 

On average, the refinance process takes somewhere between four to eight weeks. However, it can be shorter or longer depending on several factors.  

If there are delays in submitting the necessary paperwork, issues with property valuation, and the like, then the refinance process could take months.  

Lenders like loans.com.au with processes like FastTrax Refi can payout your existing home loan so you can seamlessly move to your new one. This cuts the whole mortgage refinancing process to around three weeks. 

Why refinance with loans.com.au? 

We are proud to offer one of the most competitive interest rates in Australia for customers who want to refinance. By switching to a new home loan from loans.com.au, you could save thousands of dollars and own your home sooner. 

At loans.com.au, you can expect: 

  • Award-winning home loans packed with useful features 

  • A game-changing online model that lets us provide ultralow interest rates 

  • Simple online application process with our innovative onTrack system 

  • Reputable lender backed by our parent company Firstmac, which has been in business for over 40 years 

  • Quick refinance process with FastTrax Refi which lets us pay out your current lender without you having to contact them 

All you need to do is apply online; our friendly lending specialists are there to help you out every step of the application process.  

What is FastTrax Refi? 

FastTrax Refi is a super-fast process where loans.com.au pays off your old loan before sending any paperwork to discharge the loan. In that way, you start saving on interest and repayments as soon as possible. 

From the time you return the completed mortgage documents and Loan Agreement to us, it only takes days to switch to loans.com.au.  

FastTrax Refi is online from start to finish which puts you in control of how fast your application progresses. 

What is the onTrack advantage? 

onTrack is our innovative online portal which allows you to complete your home loan application entirely on your handheld device or computer from initial contact through to settlement and beyond.  

Using onTrack means that you can complete your loan application in your own time. You don't have to wait for a bank branch to open or go to an office. 

Here’s what you can do with onTrack: 

  • Check the status of your loan 

  • Download all required forms and documents 

  • Easily track what documents you’ve submitted, what we are doing, and what you need to do next  

  • Communicate with your loan support officer through a real-time messaging system 

onTrack gives you more control to fast-track your refinance and more knowledge than traditional lending processes. 

Ready to refinance your loan? 

Contact us or apply online today! Get in touch with us and our friendly lending specialists will be happy to discuss your loan options. 

About the article

As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.

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