Thinking about refinancing?

A home loan refinance is the process of replacing your existing home loan with a new one.

This might involve switching loan types, lenders or home loan features.

Refinancing can allow you to potentially save money, access equity, consolidate debt or adjust your loan terms to better suit your financial goals.

An Aussie Broker can help you through the process and answer your questions, for free.

While the refinancing process can vary depending on the lender, type of loan and even your financial situation, there are a few common steps that typically all refinancers must go through. These include:

1. Understand your financial needs and goals so you can find the right home loan

2. Research and compare lenders and home loan products

3. Gather the necessary documents for refinancing

4. Submit a refinance application to your chosen lender

5. If approved, you'll receive a loan offer detailing the new loan’s terms and conditions

6. Review the offer, sign the necessary paperwork and go through the closing process

7. The new loan funds will be used to pay off your existing home loan and you can start making payments on your new loan

Get help from your local Aussie Broker to navigate these steps and make the whole process easier. Remember, home loan help from us is free^.

You might want to consider refinancing your home loan if:

• Interest rates have dropped since you last refinanced or got your original home loan

• Your credit score has improved, making you eligible for better loan terms

• You want to change your loan type, like switching from a variable rate to fixed rate home loan

• You’d like to access the equity in your home to fund other purchases, such as a renovation, holiday or your next property

• You want to shorten or lengthen your loan term

Generally, there is no set limit on how often you can refinance your home loan.

While refinancing can affect your credit score, the impact will be minor and temporary. Once you start making repayments on your new loan, your credit score will improve.

Keep in mind that multiple loan applications with different lenders are recorded as ‘hard enquiries’ on your credit report and can negatively impact your score.

You can minimise the number of hard enquiries submitted by comparing your options before applying for a loan, rather than applying for multiple loans in a short timeframe.

Get in touch with a financial advisor to find out if refinancing is the right move for you.

The cost of refinancing a home loan can vary depending on factors like the lender, outstanding loan amount and your financial situation.

Typical costs include:

• Application and establishment fees

• Discharge fees

• Property valuation fees

• Lenders Mortgage Insurance (LMI) if you have less than 20% equity in your property

• Break costs if you have a fixed rate home loan and choose to refinance before the end of your fixed term

Before starting the refinance process, speak to an Aussie Broker to weigh the pros and cons and see if refinancing could save you.

The amount of equity you need to refinance depends on the lender's requirements and the type of refinance you're pursuing.

Generally, lenders prefer borrowers to have at least 20% equity in their home to qualify for a refinance without Lenders home loan Insurance (LMI).

A cash out refinance allows you to borrow against the equity in your home to receive a lump sum of cash.

You can do this by replacing your existing home loan with a new one that has a higher balance. The difference between the two loans is given to you in cash.

This cash can be used for various purposes, such as home improvements, debt consolidation or other financial needs.

It’s a smart move to speak to your financial adviser to see if a cash out refinance could be right for you and learn more about the costs and potential risks.

You can also talk to an Aussie Broker to learn more about cash out refinance process.

When you refinance your home loan, the term of the new loan can be adjusted based on your preferences and the terms offered by the lender.

While it is common for homeowners to refinance to a 30-year term, it is not the only option available. You can choose a loan term that suits your needs.

If you do decide to choose a shorter loan term, it’s important to consider that your repayments will likely increase (unless the reduction in the interest rate offsets that). This is because you're paying off the loan in a shorter amount of time.