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How long does it take to refinance in 2021?

In 2021, many homeowners are looking to get a better deal on their home loan by refinancing. Because of the pandemic, many Australians have realised that they should take advantage of interest rate cuts to make big savings on their mortgages.

The duration of the refinancing process can vary between borrowers, so it’s important to give yourself more time to refinance than you think you will need. It also helps to refinance during a time where you aren’t experiencing too much pressure in your personal and professional life.

Sometimes the mortgage refinance process can take as little as a week, but there are many elements that can influence the speed of refinancing. In this article we’ll explain how long refinancing can take, what you can do to speed up the process, how much it costs and other factors to consider.

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How long does refinancing usually take?

As mentioned above, it could take as little as a week for a lender to refinance your home loan. However, it’s important to note that the process will differ between lenders. Some lenders will spend more time examining your bank statements, for example, than other lenders would. For other applicants, it can take between 4-6 weeks for a lender to process and approve your refinance.

Other factors that can influence the speed of refinancing:

  • How quickly you upload or provide your documents
  • How thorough your application is (e.g. providing more than enough supporting documentation)
  • How quickly your lender reviews your application
  • The strength of your application (i.e. a strong applicant with a good credit score will often have their application processed and approved faster)

What can cause delays to your refinancing application?

  1. If your chosen lender decides they want to see more documentation. For example, the lender might originally ask for just 3 months of bank statements and then later decide they want to see a full 6 months.
  2. If the applicant makes errors in their refinancing application or doesn’t submit all the necessary documentation
  3. Not getting home loan pre-approval
  4. Not seeking help from a mortgage broker.

How to refinance quickly

The best way to improve your chances of getting a quick refinance is to present yourself as the ideal applicant.,To do this, you need to ensure that your application is flawless - that means no errors or missing paperwork..

Getting pre-approved can also speed up the process. Before you even get formal pre-approval, you can get a free, quick insight into the likelihood of getting approved for a home loan with Lendi’s Approval Confidence™ feature. Unlike a formal pre-approval application, there is no credit check involved and you will get a realistic look at your home loan options within minutes.

However, it’s not guaranteed that you’ll be able to refinance your mortgage quickly even when your application is perfect. Delays can happen and some lenders simply take longer than others to process applications.

If a quick refinance is a priority for you, speak to a mortgage broker or Home Loan Specialist for advice. They may be able to recommend specific lenders or provide tips.

Why should you refinance your home loan in 2021?

As Australia moves towards post-COVID economic recovery, Aussies are looking for ways to save money. With interest rates at record lows right now, there’s a good chance that you could save by refinancing. If your loan is more than 18 months old, you are probably paying more than you need to.

You may not even need to refinance to get a lower interest rate. Find out what rates your lender is offering to new customers and call them up and ask them to lower yours! Read our article on negotiating a lower interest rate for more information.

Other reasons to consider refinancing:

  1. Your financial situation has changed. For example, if your income has substantially increased, you may like to increase your monthly repayments which will reduce your loan term and how much interest you pay over time.
  2. Your needs have changed. Maybe you want to try out some loan features, like an offset account or you want to switch between a fixed and variable interest rate.
  3. Debt consolidation. If you have other debts like a personal loan, car loan or credit cards, you can streamline your finances by consolidating debts within your home loan.
  4. Investment plans. If you have enough home equity, you could use some of it to invest in property or shares.
  5. It’s time to renovate. Renovations can add value to your home and improve your lifestyle. You may be able to tap into your home equity and get a cash out refinance if you need funds to cover your project.

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How much does it cost to refinance a home loan?

There are usually a number of costs associated with refinancing your mortgage, but these will vary depending on your existing loan, future loan and the lender(s) involved. Before you refinance, it’s important to get a good idea of the costs involved and see whether the benefits of refinancing will outweigh these fees.

Here are some typical costs that may be associated with refinancing:

  1. Break costs: for those on a fixed interest rate refinancing before their fixed rate period ends.
  2. Home loan features: adding an offset account, redraw facility and other features can save money but often come with fees.
  3. Application and establishment fees: many lenders charge application and establishment fees, but some lenders will waive these fees and closing costs.
  4. Maintenance fees: annual or monthly fees may be charged on certain home loans.
  5. Property valuation: while most lenders will professionally value your property free of charge when you refinance, organising an independent property valuation can cost between $200 and $600. A valuation is necessary when refinancing to accurately determine home equity.
  6. Lenders Mortgage Insurance (LMI): LMI may be charged if you have less than 20% equity in your home.
  7. Other: legal fees and mortgage registration costs may also arise when refinancing. It’s smart to check with your lender or a Home Loan Specialist to find out what your fees may include.

What documents do I need to show to refinance my home loan?

To improve your chances of getting your home loan refinanced quickly, you’ll need to make sure you submit all the required documents.

Your chosen lender and mortgage broker will tell you what you need to provide, but here is some of the paperwork you will likely need to show:

  • Proof of identification: e.g. passport, drivers license, birth certificate
  • Income: e.g. tax returns, recent payslips, PAYG statement
  • Expenses: bank statements, list of your typical expenses (e.g. childcare, groceries)
  • Assets: ownership details for other properties, cars, savings, investments
  • Liabilities: statements outlining existing debts
  • Details of your existing home loan: length of term, any exit fees
  • Repayments: recent home loan repayment statements
  • Building insurance policy
  • Council approved plans if you’re refinancing to renovate

If you forget to submit any required documents, it can lead to delays in your application. Unfortunately even if you submit all the documentation correctly, your lender may still ask for more information.

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Other ways to save on your home loan in 2021

Many banks and mortgage lenders are offering zero fee or low fee home loans as a means to attract more customers in an oversaturated market. You may also come across cashback deals and offers that can help save you money.

While these offers can be appealing, make sure that you are considering ALL the costs involved, as well as the home loan product as a whole. Sometimes lenders offering low fee home loans will charge higher interest rates to balance out costs. The interest rate isn’t the only home loan feature you should consider as it’s important to find a loan that suits you — regardless of fees.

Got a home loan question? Just ask!

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

Tags: interest rate, home loan, refinance, lender, debt consolidation, equity

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Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 35% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. Lendi's board is majority independent and non-executive.
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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