What is refinancing your home loan?

By June 16, 2018 Blog

Have you considered refinancing your home loan?  Regularly reviewing your mortgage to make sure it offers the features you need is just part of being smart with your finances.

What does refinancing your home loan mean

Refinancing means moving your home loan from one bank to another. It’s not a loan transfer, which involves swapping to a different type of home loan, changing your repayments, or splitting and combining loans, all while remaining with the same lender.

Essentially, it’s considered a whole new loan to the bank. Because you’re not buying a new home, the process doesn’t involve another vendor or settlement agent, although you do still need to get the property valued.

Use our comparison calculator to see what you could save.

How do you refinance your home loan?

The first step is to talk to a Lending Adviser at Geelong Mortgage Advisers. They will outline what’s involved and guide you through the steps in more detail and be on call when you need them.

Although it’s not a new loan for you, it will be a new loan for the lender you choose. A valuation of your property will be carried out and you’ll usually need to give them statements on your current home loan and a pay out figure as well. This is the amount remaining on the loan that will be paid out to your current lender.

You’ll also need to organise a discharge with your original lender. This can take a few weeks so should be organised early. A settlement date will be organised, which is arranged between the two lenders to transfer the mortgage title.

The costs to refinancing

It’s important to consider the costs associated with refinancing and your lending advising will ensure the benefit and savings far outweigh the costs.

Discharge costs

Banks will usually charge a fee for you to discharge your mortgage (this is when the bank’s name is removed from your property title). The cost varies from bank to bank and usually takes a few weeks to be processed.

Lenders Mortgage Insurance 

When you refinance your mortgage and your new bank is lending you over 80% of your property’s value, you may need to pay Lenders Mortgage Insurance (or LMI).

Breaking a fixed rate loan 

If you are currently on a fixed rate loan at your bank, you may incur a charge to break that term early. The cost depends on how long is left to run on your fixed term and what your fixed interest rate is. Your current bank will be able to provide an estimated break cost.

Don’t wait….

Call Geelong Mortgage Advisers today for an obligation free home loan review and see how much you could save. 0467 198 549