How To Refinance
Your Mortgage

Refinancing your mortgage can be a smart move. It gives you the chance to switch to a home loan with a lower interest rate and secure better terms. Along the way, you could also end up reducing your monthly repayments, consolidating your debt or gaining access to your equity.

The process of mortgage refinancing is fairly straightforward. It involves paying out your existing home loan and replacing it with a new one. You might stick with the same lender, or it may mean you move to a different bank. It all depends on what deals are available and what’s going to work best in your situation.

So, how exactly do you get started?

First, you need to figure out if refinancing is right for you. There are lots of potential perks, but it may not always be in your best interest to refinance your mortgage.

Before you start the process, you need to think about your long-term financial goals. Ask yourself, what do you hope to gain from refinancing?

You also need to consider timing. What’s happening in the market? How long do you plan to stay in your current home? Is your earning capacity likely to change in the future?

It’s a good idea to sit down with a mortgage broker and have a chat about your situation to see whether refinancing is going to work for you.

Review Your Finances

Let’s say you’re in a position where you’ll likely benefit from refinancing your mortgage. Next, you’ll need to take a look at your finances.

When you applied for your existing home loan, you demonstrated your capacity to pay it back. You’ll need to do the same when you refinance by getting approval from your lender to take on the new loan.

Your lender will ask a range of questions, including –

• How is your credit score?
• How much equity is in your home?
• How much do you have in savings?
• Can you cover refinancing costs?

If you want to switch home loans, you first need to make sure you’re in a strong financial position to ensure you’ll receive approval.

Weigh Up Your Loan Options

Now you can start to compare home loans and find what’s going to work best for you. You could do your own research online, talk to your existing lender or reach out to a mortgage broker.

There are a lot of home loan offers out there and it’s important to consider all your options. While your bank may have a selection of loan products available, a broker can review all of the potential offers on the market to help you get the best possible deal.

But it’s not just about taking advantage of promotions and incentives. You need to find a home loan that fits in with your goals and offers the right features and benefits for your situation.

Doing your own research may only get you so far. By having a chat with a mortgage broker, you’ll know exactly which loan options are viable for you.

Find Out What it Will Cost

Refinancing your mortgage can be a relatively easy process, but that doesn’t mean it comes free of charge.

Just like setting up your original mortgage, there are fees and costs associated with switching to a new home loan. You’ll need to make sure you budget for:

• Closing costs
• Application fees
• Discharge fees
• Valuation fees
• Land registration fees

The exact cost of refinancing can be impacted by a range of factors and fees will vary from lender to lender. As a general rule, you’ll be looking to pay a few thousand dollars all up. This is why it’s important to review your finances early on. You don’t want to come this far only to be faced with unexpected costs you can’t recoup.

Apply for Your New Home Loan

Once you’ve decided on a loan and all your ducks are in a row, it’s time to apply for your new home loan. If you’ve chosen to use a mortgage broker, they can handle all of this for you. Otherwise, you’ll need to go direct to the lender and manage the process with them.

When your application is approved, your new lender will pay out your old one and transfer across your accounts. From here on, you can consider the process done and dusted, and your refinanced loan will be good to go.

You may be ready to get started or you might still have a few questions about how refinancing works. No matter what stage you’re at, the best way to get the ball rolling is to have a conversation with an expert.

At Loan Monster, we’re here to look out for you. Our mortgage brokers can simplify the whole process and give you the right advice so you can make the best decisions. Get in touch with us today to see if you should refinance your mortgage.