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My tips for successfully refinancing

Changes in your finances, lifestyle or market interest rates can signal that it’s time to refinance. At Lendi, we understand that refinancing can appear to be an overwhelming process, so we’ve outlined 8 tips to help you refinance smoothly and successfully.

1. Evaluate your existing home loan

Your current home loan is the standard to what you’ll compare future home loan options to. It’s important to know and understand what you like and don’t like about it. What is it about your current home loan that makes you want to refinance?

It might be that you think you can get a better interest rate elsewhere. Or perhaps you have problems with your lender, such as communication and convenience issues that you’d like to avoid moving forward.

There doesn’t always have to be something wrong with your loan — it might just not suit you anymore. Changes in your personal life and income can influence your ability to make repayments. Experiencing a loss in income might make you want to reduce your minimum repayment amount.

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2. Know exactly what you want

After assessing your current home loan, you should have an understanding of what you don’t like about it. Now it’s time to think about what it is that you want in a new loan.

Your reason for refinancing may be simply to secure a lower interest rate, but there is more to home loans than just interest rates. It’s important that you like every aspect of the home loan product. Home loans can be customised more than most borrowers realise. Whether you want to add loan features, extend your loan term or have the ability to make extra repayments, there’s probably a home loan out there for you.

It’s a good idea to check that you have a healthy credit score as the better your credit, the better your chances of getting your ideal home loan.

3. Use an online home loan platform

If you’d like to search for home loans from the comfort of your home at any time you like, consider using an online home loan platform. Platforms like Lendi allow you to search, compare, apply and be approved for home loans entirely online. Our Home Loan Specialists will be on hand to answer any questions and guide you through the process.

We work with over 35 different lenders to provide borrowers with a range of loan options to suit their needs. Even if you have specific needs or are an unconventional borrower, we’ll try our best to help you find a suitable loan to refinance to.

Our service is completely free and we’re happy to answer any questions you have before, during and after the refinancing process. Click here to book an appointment to chat with an expert.

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4. Consider switching lenders

While it can be easier to remain with your existing lender, it’s not always a wise idea. We know that many lenders charge a ‘loyalty tax’ to their longer-term customers by not passing on interest rate cuts or other extras offered to new customers. Even if you are able to benefit from these features, you might actually be able to find a more suitable home loan package with another lender.

5. Calculate the costs involved

There are usually some costs associated with refinancing, but that’s not a reason to avoid it altogether. What’s important to consider is whether the costs will outweigh the long-term savings that will come from refinancing.

Many lenders charge application or establishment fees for setting up the new loan. These can cost several hundred dollars, but every lender is different. Annual or monthly maintenance fees are also commonplace.

However, many lenders don’t charge fees like this for any of their home loan products. Speak to your mortgage broker if you’d like to find a loan without fees like this.

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If you opt to add a loan feature, such as an offset account or redraw facility, you may have to pay ongoing fees. It’s typical for there to be an annual fee for offset accounts and withdrawal fees for redraw facilities.

Break fees may arise when homeowners refinance their fixed rate loan before the fixed period is over. If you are in this position, speak with your lender to find out what the costs might be and decide whether financing is worth it at this time. Remember that your fixed period won’t last forever — most fixed periods are between 1 and 5 years. Sometimes it makes more sense to wait until this time is over.

Break costs won’t apply when refinancing from a variable rate home loan, but you need to be mindful of other fees.

Other fees can include:

  • Exit fees (for home loans contracted before 1 July 2011)
  • Property valuation
  • Mortgage registration
  • Legal fees

Related: How much refinancing might cost

6. Traditional lenders vs online lenders

Another consideration you might have when refinancing is deciding between refinancing with a traditional bank or an online lender. A traditional lender will likely have physical store branches that you can visit at anytime during their trading hours. Some borrowers like to get their home loan from the same bank that they use for their regular credit and debit cards. This can be helpful in managing your finances but probably shouldn’t be your only consideration.

Online lenders lack that physical component, but may have more extensive customer service hours meaning that you can access assistance at any time. Online lenders tend to process loan applications more quickly and may specialise in home loans specifically. For ‘non-conforming’ borrowers, it’s likely that online lenders will have more home loans available for your unique circumstances. Plus, borrowers can enjoy the convenience of dealing with home loan matters wherever they want.

7. Look into debt consolidation

If you have multiple types of debt, you may find debt consolidation to be a useful solution. Debt consolidation streamlines your loans into one monthly or fortnightly repayment within your home loan. For busy or overwhelmed borrowers, this could be the key to better managing your finances because it makes you less likely to accidentally miss repayments.

Types of debt you can consolidate into your home loan:

  • Car loans
  • Personal loans
  • Credit cards

You set a repayment period for your consolidated debt within your loan. For example, you can allocate 3 years to pay off your personal loan within your 20 year home loan. The benefit of a consolidated loan is that your debt is charged interest at the same rate as your home loan.

Home loan interest rates are usually much lower than rates for unsecured debts, like personal loans. This way, you could save on interest while alleviating stress.

8. Need extra cash? Check out your equity

Whether you want to do some home renovations, buy a car or an investment property, you might be able to finance it through your existing equity. Homeowners with a significant amount of equity in their property may be able to access it through an equity home loan. There’s also a range of criteria you’ll have to meet in order to be eligible. If you’re interested, speak to a Home Loan Specialist to find out how much equity you can access and what your options are.

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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: refinance, interest rate, home loan, debt consolidation, break cost, variable interest, fixed interest, equity

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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.
*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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