Blog

To put it simply, refinancing is taking your existing mortgage and replacing it or paying it off with a new mortgage. This can be for a variety of different reasons, such as a change in financial positions, personal circumstances, or for a better deal on your home loan (lower interest, fees and repayments). However, there are costs to refinancing which is why it is important to ensure you are getting a better deal when you refinance. You can refinance to a different loan and still keep the same lender but it is also possible to refinance to a different lender completely. While it is easy to understand refinancing on a surface level, it is important to understand the practical details if you are considering this. 

Speak to Your Broker

The first step in the refinancing process is to reach out to your broker and enquire about the loan you are interested in refinancing to. Your broker will ask a series of questions related to employment and your financial situation in order to determine your suitability for particular loans.

Documentation and Paperwork

You will then be asked to send documents to confirm your identity and your financial position. It is a good idea to ensure you have these documents prepared prior to beginning your negotiation with a lender to streamline the process. The documentation required includes the following: 

• Personal identification 
• Proof of income
• List of existing loans and expenses
• List of current assets 

Property Valuation

Once the lender is satisfied with the paperwork you have sent through and they have confirmed you are eligible the next step is for them to value your property. This is done so that they can determine the loan to value ratio. LVR is important as it is a factor the lender will use to determine whether your loan will be approved or not. 

Settlement

If everything goes smoothly up until this point your new loan should be approved and your lender will transfer the property and debt to your new loan. If you are refinancing to a new lender then they will have to contact your old lender to organise the transfer. Depending on a number of factors the settlement process can take weeks and you may have to pay settlement fees.

While refinancing can be a lengthy process it is worth the time if you can save lots of money in interest and fees by refinancing, or if the new loan better suits your personal circumstances. It is always important to weigh the cost of refinancing with the perceived benefit. A mortgage broker can help you  through this process so you can spend more time enjoying your new home rather than getting frustrated with negotiation and paperwork. 

If you would like to learn more about refinancing your home loan, please get in touch with Euphoria loans today!

‍