What do you need to know about home loan refinancing?

The world of lending is always changing – and the home loan that might have worked for you just a few years ago mightn’t be the best fit now! This is where home loan refinancing can enter the frame. It involves paying out your existing mortgage for a new one, for any number of reasons.

You might be locked into a fixed rate home loan but want to make the most of plummeting interested rates, or just want to extend the life of your current loan. Or you might find yourself in a different stage of life than you were previously, be it a budding family or downsizing, and your current home loan doesn’t fit. You could even be look to take the next step in your real estate journey and take out an investment home loan.

Think this is for you? Here are a few things to speak to your mortgage broker about when home loan refinancing.

How easy is the process?

In most cases, applying to refinance your home loan isn’t much different from applying for a regular mortgage. You’ll often need the same paperwork the second time around as you did when first applying for finance. In fact, if you’re sticking with the same lender, you mightn’t need to provide too many additional pieces of paper as they’ll already be on file.

Of course, if your situation has changed since the last time you applied – particularly if it has been a long time between drinks – you’ll likely need to make this clear. For instance, you might have a different stream of income, become small business operator or have a few more personal loans to your name.

To make sure your application has the best chance of being accepted, it’s worth checking in with your mortgage broker about the type of documents you might need to have on hand. This can make the process a lot easier, and can help your broker find a home loan that works for your scenario.

Are there any extra costs?

One of the things you’ll probably need to have a careful think about is the fees involved with refinancing. The new lender may have a list of upfront charges you’ll need to pay when switching to their services, and your current is likely to have an exit charge in place if it was created before July 2011, like deferred establishment or early repayment fees. There’s also a list of government fees that could enter the picture. Mortgage registration fees, for example, could come into play when switching from one home loan to another.

Your mortgage broker can assist with these fiddly bits and pieces, helping you to compare different home loans and figure out what the costs are going to be, including the repayments on the new mortgage.