BusinessJuly 2015

Refinancing 101: The important ‘need to know’ details about the refinancing process

With record-low rates lingering, now may be the time to refinance to a better deal so here’s an overview of what’s involved to get you started.

With the RBA keeping the official cash rate at its record low of just 2.25 per cent, lenders are competing to win your business and borrowers are in a strong position.
While refinancing might sound daunting it doesn’t have to be, so here are some key things to know.

What is refinancing?
Refinancing involves replacing your home loan with a new mortgage that (ideally!) gives you a better deal, whether through a lower interest rate or different loan features that you want. Your original loan is paid out by your new one, and the balance transferred.

What’s involved in refinancing?
When you refinance you’re applying for a new loan, so you need to go through a similar process to when you got your first mortgage. Application, approval and settlement are all involved in refinancing.

What do I need to do before refinancing?
• Know what you’re getting: Make sure you know your current interest rate, what you still owe on your loan, your property’s value, what loan features you need, and any fees such as mortgage discharge or exit fees (if they apply).
• Prepare for valuation: Your new lender will want to value your property so ensure it is as well presented as it can be.
• Paperwork: You’ll need to have ready proof of income, outgoings, etc so gather up your pay statements, bank statements, credit card statements, tax certificates, proof of ID etc as these will all be needed if you go ahead.
• It takes time: While every lender is different, it can take some time to discharge a mortgage. Just make sure you allow ample time for the process to be completed by both your current and new lender.

While refinancing is intended to save you money, there can be some costs to refinancing so make sure you do your sums to work out whether you’ll be better off in the long term.
The best part about refinancing is that you don’t have to do it alone. A mortgage broker can manage the process for you, from comparing other lenders and loans to explaining the costs and completing all the paperwork.
Senior Aussie Broker, Janine Ashmore can be contacted on 0488 332 233.