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Refinancing facts and myths

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Refinancing your home loan can be a great way to save money and adjust your loan to fit your changing lifestyle needs. It’s also not as complicated as it may seem, so we’ve broken down 6 facts and myths about refinancing.

1. FACT: Did you know that you can refinance in a week?

Refinancing can often seem like a lengthy and overwhelming process, but it doesn’t have to be. In 2019, Lendi launched our Approval Confidence™ feature that can give you a realistic insight into your home loan refinancing options within an hour. This way, you don’t have to wait weeks for traditional pre-approval. Approval Confidence™ doesn’t involve credit checks, meaning that your credit rating won’t be impacted.

Lendi works with the internal decision engines of a range of banks to assess a borrower’s personal information and credit profile to determine their suitability for the loan. Customers can quickly and easily upload all required documents any time of the day and get a swift response outlining the best loan options for them.

Before using Approval Confidence™, make sure you know:

  • Your current loan amount
  • Your property’s approximate value
  • Your current interest rate and lender
  • Your reason for refinancing (e.g. decrease repayments, pay off loan faster, consolidate debt)
  • Your intended use for the property - to live in or use as an investment property
  • A general idea of your credit history
  • Your employment type
  • The number of applicants for the loan and the number of properties included in the loan

Lendi partners with over 35 lenders and banks meaning that you have a lot of options to consider. While you might be more familiar with the big banks, you could also discover online lenders that may offer better rates and better suit your situation.

Still have questions? Book an appointment to get in touch with one of our Home Loan Specialists today.

Related: How refinancing could save you $132,000

2. MYTH: Refinancing is a lot of work

Refinancing can be time-consuming and complex, but at Lendi, we do all the hard work for you. With our simple online system, all you have to do is tell us a little bit about yourself, what you’re looking for and our technology will find the best deals for you.

You can compare loans from over 35 different lenders in one place and avoid hefty paperwork and trips to the banks.

How much can you save by refinancing?

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3. FACT: You can refinance with your existing lender

If you are happy with your existing lender but think you can get a better deal, you probably can. Compare your current home loan interest rate with the rates that your lender is now offering and see if their new rates are better. You can directly contact them and ask for the rate that new customers get, or we can do it for you.

Our Home Loan Specialists can help you refinance, so book an appointment today.

4. MYTH: the only reason to refinance is to get a better interest rate

This is definitely false. Refinancing can change your home loan in more ways than one. Here are some reasons why you might consider refinancing:

  • You want a lower interest rate
  • You’d like to increase or decrease your loan repayment term
  • To consolidate debt
  • Switch between a variable and fixed interest rate
  • Add loan features (e.g. redraw facility, offset account)
  • Switch from an investor home loan to an owner-occupier loan
  • You are unhappy with your current lender
  • You want some extra funds to pay for renovations
  • Your financial situation has changed

How much can you save by consolidating debt?

Roll your credit card, car or personal loans into your home loan.

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5. FACT: If it doesn’t save you money, it doesn’t make sense

In most cases, people refinance to save money. Something borrowers need to look out for when refinancing are break costs. Break costs occur when someone on a fixed rate home loan ‘breaks’ their fixed rate loan before completion or exceeds the maximum allowed amount of extra repayments. Fixed rate periods usually last between 1-5 years and if you opt to refinance before the end of the fixed term, you may be subject to break costs.

It’s a good idea to figure out how much you might be required to pay in break costs before refinancing. If you’ll end up paying more in break costs than you will save by refinancing, it may be better to wait until the end of your fixed period.

One way to avoid break costs is to pre-emptively work out if flexibility is a feature that you look for in a loan. Home loans with variable interest rates offer this flexibility by allowing you to refinance at any time without penalty. You can also make unlimited extra repayments on a variable rate loan.

If you like the stability of your fixed rate loan but would like some more flexibility, split rate loans are an option to consider.

Related: Home loans explained: Should I get a fixed rate or variable interest rate loan?

6. FACT: You need to check your rate regularly and it’s smart to consider refinancing every couple years

One of the biggest mistakes borrowers make when they get a home loan is blindly making repayments and forgetting to check for better deals. Interest rates fluctuate a lot, and while your interest rate was good a couple of years ago, it might not be now.

Always be on the lookout for more competitive interest rates as you could save thousands and possibly even pay off your loan faster. Don’t be afraid to consider refinancing - it’s less scary than you think.

Many lenders reward loyalty and may be more than willing to offer you a more competitive interest rate after you’ve been with them for a couple of years. Bonus points if you have a history of making regular, on-time repayments on your loan.

Lendi can make your refinancing process easier and quicker. Book an appointment with one of our Home Loan Specialists today.

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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, refinance, home loan, debt consolidation, fast approval, pre approval

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates
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Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
# 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.
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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