Eight Steps to Refinancing Made Simple
So, you have decided you think you want to refinance. Most people refinance when they are dissatisfied with your current lenders’ offer or poor customer service.
- Work out the benefits of refinancing.
Either Better Customer Service or Cost Savings
Choosing better Customer Service – most Mortgage or Finance Brokers know which Lenders have Excellent Customer Services.
Cost saving – be sure that you have an exact figure on the costs. You have to pay certain costs to refinance, for example any new lender application and settlement fees, outgoing lender discharge fees and State Government Fees to register and discharge a mortgage. All these fees can be built into the new loan amount.
You also need to work out the ongoing savings of refinancing such as difference in interest rates, any monthly or annual fees.
Refinancing can save you a very significant amount of money in some situations but not a lot in other situations.
- Choosing the Right Lender
A Mortgage or Finance Broker can give you a choice of lenders from their panel that suit your particular situation, from which you can then choose one.
- Gathering the Paperwork
Some paperwork needs to be gathered together.
Identity Documents
Latest payslips and PAYG Summary or for Self Employed one- or two-years tax returns and Notice of Assessment
Loan and other debts statements savings statement, rates notice, HECS debts, superannuation statements all need to be gathered.
It might seem like a lot, but if you put your mind to it, it’s pretty easy!
- Prepare Your Application to the new Lender
The person assisting you with the refinance will then prepare your application to be submitted to the new lender. You will need to sign certain forms to go to the bank also. If you are refinancing with a broker you will need to sign a statement of credit advice.
- Submitting Your Discharge to the Outgoing Lender.
All lenders have slightly different processes, some might expect you to call first or others might expect you to fill in a form first. The Outgoing lender will then get their “Retention Team” to see if they can coax you into not refinancing, by offering a better rate that they were not prepared to offer previously.
You need to remember that they could have done this much early in the process.
- Your application is submitted to the new lender.
Your application then goes through the assessment process, this may take a number of days between submission and assessment.
The Lender may come back and ask for more or clarifying information.
Valuation
The new lender will require a valuation to be undertaken by a registered valuer as part of the new lenders assessment requirements.
Final Approval
If the new lender accepts your application including the valuation, they will issue formal approval.
- Loan Documents for Signing
The new lender will then prepare loan documents for you to sign, once signed they are returned to the lender.
Once the loan documents are returned and found to be in order, the new lender will book in settlement with your outgoing Lender.