Refinancing

What happens if your current situation becomes very different to what it was previously? We recognise that the loan you took out when you first bought your property may not fit as well now as it did then.  We’ve put together a guide which outlines what you can do to refinance your loan to better suit your needs.


Why should I refinance?


In today’s society life can change with the blink of an eye, so why should your mortgage stand still when everything else is changing at a rapid pace? Here are a few considerations that will help you decide if it’s time to refinance, and bring your mortgage up-to-speed with the rest of your life.

  • Lower interest rate – The most likely reason you’re looking to refinance your mortgage is to get a better deal on your interest rate. The interest rate is one of the most significant factors in determining how much your repayments are each month. While it’s important to have a competitive rate, you need to ensure the loan features suit your needs, and give you a mortgage that works for you. By speaking to a mortgage broker or credit professional you will receive guidance on the best mortgage to suit your requirements.
  • More flexibility – Many people only realise the restrictions of their home loan when they try to do something, only to find their loan either doesn’t offer that feature, or they will incur a hefty fee to do it, by which stage it's too late. If this situation sounds familiar, it may be time to speak to a mortgage broker or credit professional to see if there are other products that offer the features you are looking for.
  • Changing circumstances – A home loan is a long term commitment (sometimes up to 30 years) and over that time your life situation may change many times. For example, as a first home buyer you may have taken out a loan with limited features, combined with a low rate, to allow you to borrow as much as possible. However, five years later, with changes to your family and work situations, you may start looking for more options from your mortgage, to better suit your current needs.
  • New product options – In the current lending market, competition between banks and other lenders is fierce. This means new products are being developed, which may suit your situation better than your current loan. It’s important to receive the most up-to-date advice from a mortgage broker or credit professional, as there may be a home loan product that makes refinancing your mortgage worthwhile.

How do I refinance?

Some people avoid changing their loan because of the effort involved with the refinancing process, but it may not be as difficult as you think. Here are a few hints to help make it as quick and easy as possible:

  • Start the discharge process early – Your current lender may be reluctant for you to take your mortgage elsewhere and preparing the loan for discharge can often be a lengthy process. This means it is best to advise your current lender of your intention to refinance your loan as early as possible. This will avoid being held up once your new loan is ready to go. 
  • Be prepared – When applying for a new loan, whether it’s through your current lender or new lender, you’ll need to provide up-to-date documentation about your earning capabilities, asset position and your expenses. Having the correct home loan documentation like pay slips and loan statements ready before starting the application process will help things move smoothly and ensure you avoid being delayed because of missing paperwork.
  • Speak to those in the know – The task of researching a loan can be quite daunting, as there are many different providers and loan options available, and your home loan requirements are unique to your situation. This task will be made easier by speaking to a mortgage broker or credit professional, as they can advise on the best home loans available in the market. They’ll use their knowledge to help you choose a product that not only suits your current situation, but also takes into account your plans for the future.

Things to consider  

Changing home loans may not be the best option for everyone. Here are a few points to consider if you’re wondering if refinancing is the right option for you.

  • What might the future hold? – No one can tell exactly what will happen in the future, but having a good grasp on what you expect to happen in the next few years (such as children, income changes, further property purchases and retirement) can help you work out what features you want to have in your loan. Having this checklist in place makes finding a suitable loan much easier.
  • Interest rates aren’t the only cost factors – While the interest rate plays a big part in the costs attached to your mortgage, it shouldn’t be the only consideration. You also need to consider fees and charges to get a full understanding of the costs associated with your loan before you can decide whether the new option will leave you better off.
  • Refinancing costs – Your existing loan may have fees and charges written into the contract that are applied when you pay out and discharge the loan. When you contact your current lender to advise them of your intention to refinance your loan, you should ask for an indicative pay out figure, so you are aware of any fees that may be charged on closing the loan.

arrow-left.gif The lending process


Our suggested products 


SmartFit

A fully featured variable home loan with a 100% offset account to maximise the benefits of any savings you build up by reducing the interest charged on your home loan. The SmartFit loan also offers interest only repayments of up to 5 years for Owner Occupied and investors looking to pay back only the interest incurred on the loan.

Download the SmartFit fact sheet

SmartFix

A fully featured home loan with the option to fix your interest rate from one to five years, with a 100% offset account. The locked in repayments over your fixed term allow you to take control of your budget, while still benefitting from the interest offset for any savings you build up. The SmartFix loan gives customers the choice of making interest only repayments to allow investors to pay back only the interest incurred on the loan.

Download the SmartFix fact sheet

SmartDoc

A home loan which allows self employed customers to sign an income declaration form with accountant verification, instead of providing proof of income documentation. The SmartDoc loan comes with a fully featured 100% offset account to reduce the interest charged and the option of interest only repayments of up to 5 years for Owner Occupied and  investors to minimise their costs. Variable and fixed interest rates available.

Download the SmartDoc fact sheet