Although the rewards of refinancing are well-known, many hesitate because they’re uncertain how much time is required to complete the process. If you’re unfamiliar with the refinancing process, you might be wondering how much time each step takes and this guide will help you.
What are the steps to guide your refinancing?
Refinancing a home loan or other loan in Australia involves several key steps. To make it simple, these steps have been summarised to help guide you so that you understand what is involved in the refinancing process in Australia. The steps include:
- Assess your current situation and reasons for refinancing.
- Research and compare home loans or other loans to find the best option for your needs.
- Calculate the costs and potential savings of refinancing.
- Gather necessary documentation.
Necessary documentation
When you are looking at refinancing there may be some documentation you need to have in order to complete the refinance. The documentation can include:
- Last 6 months of home loan or other loan statements.
- Recent council rates notice and building insurance.
- Last 3 months of unsecured debt statements.
- 2 most recent payslips and bank statements.
- Identification documents.
This will vary depending on which creditor or lender you choose to refinance with.
Make sure that you collect all the necessary data about your current loan and required paperwork and documentation before you start looking into other potential loans. Find a suitable option that meets your expectations, then calculate its conversion costs in order to determine when switching will be profitable for you. Armed with this knowledge, make an educated decision that best works for you!
Eligibility requirements
Most lenders and creditors will have certain requirements that you must meet in order to refinance with them. Checking your eligiblity typically requires:
- Australian citizenship or permanent residency
- More than 20% equity in your home (if you’re refinancing your home loan)
- Good credit score and history
- Proof of income and employment
- Being over 18 years old
Ensuring you have a good credit score and history is vitally important. You may be wondering if refinancing your loan affects your credit score?
Sending identity and finance documentation
Once you have finished your initial conversation with the lender, they will provide a list of documents that must be sent over to confirm both your identity and financial status. This list may differ between lenders so make sure to get specifics from them beforehand. Furthermore, some may prefer written or online submissions while others might require mail delivery–ensure this is part of the discussion during your first contact in order to avoid any miscommunication later on.
Don’t wait to send off the essential documents until you have your first meeting with the lender. Instead, get them ready beforehand so that on the day following your initial contact, they can be promptly sent out and help make this part of the process significantly smooth sailing.
Settlement
After being granted the loan, your lender will reach out to your prior bank and complete a settlement process in order to transition both the debt and title of property. This may take anywhere from two weeks up until completion, with some fees potentially associated along the way.
Additional considerations
- Be prepared for potential fees such as discharge fees, break fees, application fees, and settlement fees.
- Consider using a mortgage broker or home lending specialist for personalized guidance.
- Some lenders offer fast refinancing options, such as CommBank’s FASTRefi®, which can expedite the process.
- Refinancing may allow you to access built-up equity in your home.
