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Refinancing can be greatly rewarding and money-saver. Replacing your existing loan can be a chance to lock in a better interest rate, features you actually need or a lender that understands your needs. However, it can be a bit of a process, so you will want to know exactly what you are up for before you start.

If you have been wondering how to refinance an existing loan, it is your lucky day. Here are all the steps you might need to take to get your refinancing sorted.

Step 1: Understand why you are refinancing

If you are thinking about refinancing, there is clearly something missing from your current loan. What is your motivation? Common reasons for refinancing include:

  • Securing a lower interest rate
  • Improving loan features
  • Consolidating debt
  • Accessing home equity for the purpose of renovations or purchase – investment properties, etc.

Knowing the answer to this question makes it easier to find the best new loan for you.

Step 2: Compare home loans options

If you are going to go to the trouble of refinancing, you will want to shift to the best suited new loan. Speak with a finance broker, check out some comparison rates, and the mortgage broker will help select lenders to determine which loan is right for you in terms of the rate and features. Be sure you are comfortable with your choice of the lender before you apply or transfer your home loan to another bank – making applications to multiple lenders can damage your credit score.
This might include getting answers to questions like what are the new conditions of your loan, are there any features you will not have anymore, or how long does settlement take when refinancing? ASA Mortgage Brokers can assist you in finding the best-suited lender and home loan product to meet your needs.

Step 3: Crunch the numbers

Refinancing can come with a range of costs – mortgage broker will show you all costs involved. There can be upfront fees on the new loan, exit or discharge fees on the old loan and mortgage registration fees payable to the state government. Bear in mind, Lenders Mortgage Insurance (LMI) cannot be transferred between lenders so even if you paid LMI when you first took out your loan, you will need to pay it again if you plan to borrow more than 80% of your home’s value.
Keep in mind also that your new loan term will start all over again. If you take out a 25-year home loan, the years you have already spent paying it off do not get subtracted. Make sure you calculate exactly the amount of interest you can expect to pay over the life of your new loan, and compare it to what you would pay on your current loan. Once you have all the figures available, do the sums to be sure the benefits of refinancing outweigh the costs.

Step 4: Apply for the new loan

Who does not love forms? Refinancing your home loan will mean completing paperwork similar to that for your current loan. You will need to provide proof of income (usually several sets of recent pay slips), as well as personal ID. And because you are already paying off a loan, the new lender will want to see several months of statements for your current loan.
A refinancing loan is a whole new loan – no cutting corners, no secret tricks. While it might be easier to prove you can afford to pay it, you will still have to go through the motions to secure it again. A finance broker will request a list of documents that apply to refinance.

Step 5: Prepare for a valuation

If you are refinancing a home loan, it is likely the new lender will want to value your home.
Make sure you understand how the valuation works and what to expect. Allow time to spruce things up before it is assessed, even if that is just planting some new flowers and painting a unicorn on your letterbox. There are lots of small things you can do to maximise your property’s market value. Some finance brokers may have access to CoreLogic RP Data and able to request an upfront valuation on the property with the new lender.

Step 6: Loan approval

If your application is approved, formal loan documents will be drafted and forwarded to you for signing. Be sure to read the paperwork carefully, and speak with your solicitor, conveyancer or mortgage broker if you have any questions. Behind the scenes, your new lender will get in touch with the old lender to organise the loan changeover.

Step 7: Settlement

Hooray, your refinancing loan is ready to be settled. On settlement day your new lender will receive the title deeds to your home (previously held by your old lender), and the old loan will be paid out. All you have to do is enjoy a better loan than before (and keep making repayments).
Refinancing is generally a straightforward process, especially if you have got all your paperwork on hand and have been keeping up to date with your current loan. With these home loan refinancing tips, you could be rocking a new loan within 4-6 weeks, pain-free.
Your mortgage broker will assist you in every step of the way to the refinancing of your home loan.

To discuss your home loan needs, contact ASA Mortgage Brokers today to book your FREE consultation appointment.


The information is a compilation from various sources for your benefit and should not be relied upon instead of appropriate professional advice. This article is prepared based on general information. It does not consider individual financial objectives or needs and is not financial product advice, and the content quoted from ME Bank Blog.