There are so many reasons that you might be thinking about refinancing your home loan today.

Probably most of you want to learn how to battle rising interest rates through switching into a lower-interest home loan.

Alternatively, a mortgage broker may have briefed you that you need to refinance to help you reach another goal, such as getting equity to remodel, to consolidate your debts, or to buy an investment property.

Whatever is your reason to refinance, this article provides valuable refinancing house loan tips to get you in the best position.

Chances are that even after some time since the mortgages are paid, both the financial conditions of the homebuyer and the conditions of the real estate market have changed for homeowners. When this happens, most often, buyers refinance to more adequately support current conditions.

Do you want to know what refinancing is, but you don’t have time to read all this information now?

That’s all you need to know about refinancing.

• What is refinancing?
• How does refinancing work?
• Is this something right for you?
• What are the benefits of refinancing?
• How can you start your refinancing journey?

Let’s begin this journey all about refinancing.

What is refinancing?

It’s the first time that we discuss ways to refinance your home loan. In our previous blog, we talked about the help that mortgage brokers can give to you for the refinance of your home loan and if you missed the information click the link to read more.

Today we will talk about the guide to refinance.

Refinancing is the process of acquiring a new mortgage to pay off your old one; in most cases, this means changing the lender.

So, amongst others, reasons for refinancing include that it is a popular choice for buying investment properties, for consolidating debt, early payoff of a house loan and to borrow more funds for extensions or renovation.

It is an internal refinancing act when you shift to a new loan package with a present lender. For example, you shift from a variable-rate mortgage to a fixed-rate mortgage.

You can however consider external refinancing. It is when you shift the loan to another financial institution hoping that they will give you a better deal or features that meet your needs better.

These days, it is one of the most common reasons for you to think of refinancing when you can get a better interest rate or several features on your mortgage product.

Now that you know what refinancing is, it is also important for you to know how refinancing works? Because without this information it is hard for you to know how lenders will help you. 

How does refinancing work?

The refinancing process is no longer cumbersome. In fact, it may be perhaps much easier than you think.

Typically, you have to apply either directly or through a mortgage broker for the purposes of getting started in the refinancing process, to a new lender. Most times this can be done online.

The new lender will ask your reasons for refinancing, how much loan you want to obtain, and what is remaining on the original loan. They will also want proof of income and expenses, just like when you applied for a home loan for the first time.

The lender will formally review your application-which may include a credit check, for example-after you provide this information. Depending on your loan-to-value ratio, they may also require a valuation of your house.

You’ll have to sign new mortgage documents if you’re approved.

As in the case of your old lender and lawyer when you bought the house, a new lender will reach an agreement with your existing lender. This step makes it such that a new lender will assume ownership of the title deed to your property and pay off your loan to your old lender.

Lastly, excess funds that the lender transfers into your account or the address you designate in case you are borrowing more than you currently owe on your house loan.

We believe till now you’re pretty clear on how the refinancing works, how lenders operate. But it is just as important to know if refinancing is right for you or not. Though, your mortgage broker will guide you, but sometimes he might skip informing you, so it will be great to have information beforehand.

How to decide if refinancing is right for you?

You are looking to improve the status of your existing loan for a purpose if you are looking at a refinance. 

• Identify your goal and motivation to refinance. What is driving the request?
•  Is it to do any of the following?
• Obtain a better interest rate?
• Improve some of the other characteristics of the loan, such as the term or switch from a variable rate to a fixed rate?
• Reduce the total interest paid on and make your debt easier to manage by consolidating?
• Access home equity?

Hope this gives you clarity on whether it is right to refinance or not. But still we want to add, do not get trapped in the rates web, before closing any deal, it is advised to contact the mortgage broker who can guide you through this path with all the details. Feel free to get in touch with ASK Fnancials, as we have been working closely with all the rates and developments.

Our next section will talk about the benefits of refinancing. 

What’s the benefit of refinancing?

Now that you have an idea whether refinancing is suited for you or not, it’s equally important to know how it will benefit you.

• Savings through refinancing are possible by:
• Lower rate of interest
• Debt consolidation
• Lower costs
• Additional features like redraw facilities and offsets

 Now let’s take a ride on the journey of refinancing?

How to start your refinancing journey?

As we have already mentioned, before you are going to make a decision to refinance, consider your long-term financial goals and the current situation of your finances. The best way to avoid the necessity for refinancing in the nearest future is doing this.

Step 1. Determine your needs and think about your options

One of the keys in making a refinance work is to make sure that the rates will stay competitive for the following five to ten years, and aside from this, cut repayments in the short term through lower rates.

Write down your requirements for a home loan and compare it with the package you already have to see if it really does not meet your requirements. There are the factors you should consider below:

• Competitive prices
• Flexible terms
• Little or no recurring fees
• Excellent customer service and support

Step 2: Discuss it with your broker or lender

Once you are aware of the features you need in your new home loan, then check whether your existing lender can give you a better deal. Your lender might do everything within its power to retain you if you maintain a good record of credit, such as offering an interest rate extremely cheap and waving at the expenses. For example, if that is the case, make sure to get written proposals from each party so you can compare them later on when comparing market rates for home loans.

Once you’re working with brokers, the first thing they’re going to do is try to determine whether you can lower your entry and exit fees by brokering a refinance with your current lender and making a few calls. Since brokers normally have massive, diverse numbers of clients with each lender, they understand how hard they can push to keep you from leaving lenders altogether.

Step 3: Refinance Application

Unless you’re refinancing with the same bank, in which case you won’t need to provide nearly as much documentation, the refinancing process is pretty much identical to when you first applied for financing.

If at any time you are looking to refinance into any of the following loan products you will have to go through another evaluation by your chosen lender to see if your finances meet their standards for the desired loan product:

• Your credit history is being negatively impacted.
• Your source of income has changed.
• Your responsibilities have changed.
• You have no equity in your home.

Pay off as much of the credit card debt, both retail and personal, as you can and top out the available balance on all your credit cards at a reasonable level.

Step 4: Finance Accepted

If you were applying to a new lender, it would take probably a week or several weeks to process your application.

If you have multiple properties, your lender will go ahead to set up a value for them. The initial appraisal is usually free, but the lender will typically charge between $200 and $300 for values on any additional properties.

Thereafter, you will receive a written notice from your lender stating that your loan is accepted; this is considered formal or unconditional financial acceptance. Thereafter, a solicitor will be instructed on your behalf by the broker or lender to prepare the loan documents.

Step 5: Make Settlement Arrangement

Your lawyer would obtain the loan documents to review and sign. Alternatively, you can read the agreements personally and be assured that you understand every detail about your particular mortgage deal.

Your new lender will handle the setting up of your new loan and how you are going to clear your old loan by liaising with your previous home loan provider. This includes the title exchange, where the banks register the mortgage against your house.

You have now got a shiny new loan! Within a few days, you’ll be getting advice on handling your new loan and every piece of information about your account.

Hope this blog helps with all the questions around refinancing. And we have now come to the culmination of details, so all that we would be looking out for is to hear from you all.

Any query, call the experts!!!

Summarise this sit and analyse the following conditions:

• Identify the advantages and disadvantages of refinancing
• Determine your objective of refinancing
• Prepare all necessary documents for calculations of refinance research all your available options
• Select your lender and be prepared with your application. 

We are here to help you throughout every step of your home loan refinance process.

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