How Do I Refinance My Mortgage?
1. Assess your current mortgage
Is your current mortgage the best on offer for your circumstances? Could you get a better deal and lower interest rate with another lender? Before making a move to another lender, check the terms and conditions of your present mortgage to see what exit fees might apply if you discharge or break your existing mortgage before its term is up. It is a good idea to look at what features your mortgage has and which of them you really use. Refinancing can be very expensive, but can work in your favour and provide you with many benefits if you do your sums correctly.
2. Research types of mortgages and home loan features
It is good to understand what type of home loans are on offer and which features you are really looking for in a mortgage. Applying for a home loan full of features that you don’t need or won’t use could end up costing you more, as these types of mortgages normally have a higher interest rate.
Use our handy checklist sheets to help you decide which features you are looking for in a home loan. This is will be especially helpful to give to your Mortgage House Home Loan Specialist when you meet with them as they can use this to start matching a mortgage to your needs. It also helps you get a handle of the jargon – and there is lots of it!
3. Arrange a meeting with your Mortgage House Home Loan Specialist
Now is the time to arrange a meeting with your friendly Mortgage House Home Loan Specialist (they can come to you at a time that suits you). Some items you may want to have prepared for your meeting include:
- Statements of your current mortgage for the past 6-12 months
- Your Home Loan Types and Features checklist completed
You want to achieve the following after meeting with your Mortgage House Home Loan Specialist:
- Have an idea of some suitable loans and lenders.
- Understand what your ‘get out’ costs of your current mortgage are
- Know the process, timing and steps involved to refinance your mortgage
4. Find the right mortgage
Your Mortgage House Home Loan Specialist will be able to provide you with a short list of suitable loans and lenders that meet your criteria.
Now it’s time to go into fact-finding mode to compare each of these mortgages, in order to find which loan you will refinance with.
Below are some questions that can assist you in refining your list. To make it easier, we have included a Compare Home Loans Table at the end of this document where you can record your results.
- What is the interest rate on the home loan?
- How frequently do you make mortgage repayments?
- Is there an application fee?
- Are there any ongoing monthly or annual account keeping fees?
- Does it have a redraw facility and what is the minimum redraw? Are there any fees?
- Are extra mortgage repayments allowed and is there are fee?
- Is this home loan portable (ie, can be taken with you, if you move)?
5. Apply to refinance
Refinancing your mortgage is similar to taking out your initial home loan. You will need to complete an application form, provide identification and produce information on your income, assets and liabilities.
6. Notify your old lender
You will need to contact the lender that holds your current mortgage to let them know that you are refinancing and that the mortgage will be discharged. (If you have a solicitor acting on your behalf they may look after this for you). Your existing lender can then provide the new lender with the necessary information to make the process as quick and simple as possible. Once the date of settlement is determined, you will be advised of the final payout figure for the mortgage (this may include a fee for discharging the mortgage where applicable).
7. The approval process
When you apply online to refinance your mortgage, the initial approval process can take as little as 20 minutes, provided all information is available. After that, you will need to send all of your documentation off to your lender. Once these documents have been received and verified, it only takes around five business days for full approval and your loan documentation to be issued.
8. Arrange your settlement
Once the documentation is completed and the mortgage is approved with the new lender, the outgoing mortgage provider and the new mortgage provider will arrange for settlement to take place. At settlement, your mortgage provider will be paid the outstanding amount and then the title will be transferred to the new mortgage provider. A document called a discharge of mortgage is given to the new mortgage provider at settlement, who then lodges it at the Land Titles Office or Registry. Your new mortgage provider will normally confirm in writing when settlement has occurred and will also advise of your new home loan details.
HANDY HINT: You can go online to complete your application or speak directly to a your dedicated Mortgage House Home Loan Specialist who will help you with every step of the refinancing process.
* The comparison rate is calculated on a secured loan of $150,000 with a term of 25 years with monthly principal and interest payments.
WARNING: This comparison rate is true only for examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
Important Information: Applications are subject to credit approval. Full terms and conditions will be included in our loan offer. Fees and charges are payable. Interest rates are subject to change. Offer does not apply to internal refinances and is not transferable between loans. Rates, fees and charges displayed apply to new borrowings only. As this advice has been prepared without considering your objectives, financial situation or needs, you should consider its appropriateness to your circumstances before acting on the advice.
NOTICE: There are currently movements in the market place which affect the price of money. Therefore there is a high probability that mortgage rates may increase in 2016. Fixed rate loans are not set (locked in) until loan funds are drawn down. All quoted fixed rates are indicative only and are set from loan settlement.
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