Refinance Lending
Refinance lending is a particularly booming sector of the finance industry, especially in recent years as many more Australians decide to focus on their home and their home life rather than travel and choose to renovate or upgrade their home. At the same time with the recent economic crisis many more Australians have found themselves jobless, with reduced hours and having trouble meeting their loan repayments or repaying other personal debt. Refinance lending can allow you to move from your current home loan to one which best suits your changing needs which may be:
- You are unhappy with your current lender.
- You are unhappy with the features you have or don’t have on your loan.
- You want a more affordable loan product with fewer fees or lower interest rates, or both.
- You are having trouble meeting your loan repayments.
- You want to consolidate your bad debts on to your lower interest rate home loan.
- You want to access the equity built up in your home for personal reasons or home improvements.
- You are moving house and need to move loans as well.
If one or more of these points sounds like it describes your situation and you could be in need of a mortgage refinance so find out more now about what is involved in the refinance lending process and how to avoid common refinance lending traps.
What Does The Refinance Lending Process Involve?
Step one
The first step is identifying that your current loan is not working for you, whether you can’t afford it or whether it is restricting the spending money you have available to improve your home, refinance lending begins once you are sure refinancing is the best option for your needs.
Step two
Before you seek external refinance lending, first approach your current lender because even if you’re not really feeling the love from your current loan, your current home loan provider should be willing to negotiate with you to offer you a better home loan deal or rectify any customer service issues you are facing. This is because your home loan lender is just like any other business, and it is much easier for them to keep you as an existing customer than it is for them to attract a new customer in your place if you leave. Also refinancing with your current lender can be a more affordable option as you can avoid many refinance costs such as exit fees and application fees on a new loan.
Step three
If you find you can’t get what you need from your current lender it is time to compare other loans and lenders. You can do this with the help of Home Loan Finder because we are able to show you loans which meet your refinance needs so you can save time on comparing loans which you are not eligible for or which don’t have the features you need.
Step four
It is now decision time and once you have chosen a new refinance lender you will need to contact your existing lender for the exact payout figures to close your loan account. You may also need to gather documentation from your existing lender to provide to your new lender to help them process your information and application.
Step five
The new lender will then set about verifying your personal information as you will need to qualify for a home loan again, because even if you were eligible at the time of the first application, your financial situation needs to also be eligible now as refinancing is very similar to applying for a new loan so don’t assume that just because you were approved for your first line you will be approved for refinanced loan. However well before you get to this stage Home Loan Finder will help you make sure that you are eligible and that all applications will be approved. At this time your loan is settled once you sign your final paperwork.
Step six
Your new loan then pays out your old loan, and your new lender organises all of this. You are then issued with all of your new account numbers and you can set up direct debit payments or your new accounts using Internet banking. You will now be able to enjoy your new loan, or the new funds which you now have access to, having refinanced using an equity loan.
Benefits of Refinancing
Refinancing to a better, more affordable, easy to use home loan can benefit you by allowing you to save money on your loan, pay less interest and pay your loan off sooner. However it is important to be aware that refinancing also benefits lenders because refinance lending allows home loan provider to attract a new customer who already has their property, their paperwork and their identification and income verification organised. This is why many lenders offer introductory interest rates or honeymoon periods to attract you if you find yourself struggling with rising interest rates on your home loan. However interest rates are not the only factor you should consider when you refinance as there are many other loan features which can save you just as much if not more than a low interest rate. Plus when you refinance you are paying application fees, appraisal costs and administration charges so your refinance lender has begun making money from you from the beginning which is why you need to make sure refinancing is also a worthwhile option for you, not just for your lender.
How Have Borrowers Benefited From Refinancing?
The previous section has shown that many people refinanced their loans during the financial crisis. This section will explain how the people that refinanced benefited. The people who refinanced benefited by being able to:
- Access equity in their home. For the people that lost their jobs the main reason for refinancing was to access the equity in their homes. By refinancing with cash out options and home equity line of credits people were able to use the refinance as a source of income until they could find another job. Furthermore, this allowed them to continue paying off their home loans.
- Save money on their loan repayments. For the people that didn’t lose their jobs 2009 was an ideal time to refinance their loans. Many people would have been on fixed rate loans so by refinancing they were able to reduce the repayments onto their loan dramatically. This also freed up more money so the economy would receive a much needed boost.
For more help or advice on deciding whether refinancing is worthwhile in your current financial situation, contact Home Loan Finder now as we can review your home loan situation and offer an unbiased opinion.
Related posts:
- Refinance
- Cash Out Mortgage Refinance
- Refinance Options
- How to Refinance an Existing Mortgage with HSBC
- Refinance Real Estate Loan
- How To Refinance Your Home Loan
- House Mortgage Refinance
- FHA Mortgage Refinance
- Mortgage Refinance Calculator
- How to Refinance
Top Home Loans
| Home Loan | Details | Interest Rate (p.a.) | Comp Rate^ (p.a.) | App Fee / Ongoing Fee | Max LVR | Min & Max Borrowing | |
|---|---|---|---|---|---|---|---|
 Loans.com.au - Dream Catcher | A home loan offer with a $0 application fee and one of the lowest available home loan interest rates. | 6.13% | 6.47% | $0 / $375 | 80% | $50,000 / $750,000 |
 
|
 UBank UHomeLoan (Variable Rate) | One of the market leading variable interest rates. The maximum loan amount needs to be 80% of the property value. | 6.14% | 6.14% | $0 / $0 | 80% | $100,000 / $1,000,000 |
|
 State Custodians Mortgage Company Standard Variable Offset Loan | Awarded the 2011 Non bank Lender of the Year this feature-packed loan rewards customers with a bonus rate drop of 0.20% after 5 years. | 6.22% | 6.45% | $0 / $345 | 95% | $150,000 / $2,500,000 |
|
Ask A Question