Refinancing your home loan: A step-by-step guide.

Refinancing your home loan can help you secure a loan that better meets your current needs. Follow our step-by-step guide to understand the refinancing process and make an informed decision.

What is refinancing?

Refinancing involves taking out a new home loan to replace your existing one. The new loan pays off your current loan, and you begin making repayments on the new loan.

Why refinance your home loan?

People usually refinance their home loans to secure a loan that better suits their current circumstances. While refinancing isn’t mandatory, it’s worth considering if your financial situation or market conditions have changed since you first took out your loan. Depending on your preferences and available offers, you can refinance with your current lender or switch to a new one.

5 steps to refinancing your home loan

Is refinancing the right move for you? Here’s our step-by-step guide:

1. Review your current home loan

Start by evaluating your current home loan:

• Remaining loan term
• Fixed, variable, or mixed interest rate
• Last interaction with your lender
• Short-term and long-term plans
• Current interest rate
• Ongoing or annual fees
• Exit costs, especially for fixed-rate loans

Identify what you like and dislike about your current loan. Consider features such as offset accounts, redraw facilities, and the online experience your lender provides.

2. Compare home loans

With a clear understanding of your current loan and needs, research available home loans. You can do this online or consult on our mortgage advisers. Consider:

• Interest Rates: Don’t just focus on low rates; check the overall value after fees.
• Fees: Evaluate upfront, annual, and ongoing fees.
• Features: Ensure the new loan offers essential features.
• Flexibility: Determine if the loan provides the right balance between fixed and variable rates and if it allows for extra repayments.

Identify if a better loan exists. If so, proceed to the next step.

3. Negotiate with your current lender

Before switching, discuss your needs with your current lender. They might offer a better deal to retain you as a customer, saving you the hassle and costs of switching lenders.

4. Apply for a new home loan

If your current lender doesn’t meet your needs, it’s time to refinance. The process is similar to applying for a home loan and can be done online, at a branch, or through a broker.

Prepare:

• Personal details and future circumstances
• Financial information (income, expenses, debts)
• Property details

The new lender will assess your application, check your credit record, and conduct a property valuation. You might receive pre-approval or conditional approval before final approval.

5. Sign your new home loan contract

Once approved, your new lender will send you:

• A letter of offer (or loan contract)
• Direct debit form for repayments
• Mortgage form for security over your property
• Notification form for your current lender

Review these documents carefully. Consult a lawyer if you’re unsure about any terms. Upon signing, your new lender will arrange settlement with your current lender, officially ending your old loan and starting the new one. Be prepared for settlement fees and charges.

Bringing it home

Depending on your situation, refinancing can take just a few weeks from application to settlement.

By following these steps and considering your needs, you can find a home loan that better aligns with your financial goals. For personalised advice, contact our Mortgage Advisers at FinancePath. Book a 10-minute chat or call 1300 780 440 to get started today!