Whilst refinancing your mortgage can seem confusing in the beginning, it’s less complicated than you may think. With historically low interest rates and increased competition across the home loan sector, lenders are fervent to get your business. When you first secured a home loan, you probably paid close attention to interest rates. Refinancing your home mortgage may therefore be a relatively simple way to save you thousands and receive a better deal on your home mortgage.

What is refinancing?

Refinancing is basically moving from your present home loan to a new home loan. The most popular reasons why people refinance are to acquire better interest rates, have access to more or improved loan features, or to merge several debts into one mortgage.

When you refinance, you can stick with your current lender – which can minimise inconvenience if you do all of your banking with the same institution – or shift to a new one.

Make the call

A good place to start is by consulting with a mortgage broker. A broker can examine hundreds of loan options across both bank and non-bank lenders to search for a loan that fulfills your requirements – saving you money and time.

Evaluate your options

Once you understand your position with your existing lender, it’s time to do some research. You’ll want to ascertain if you can get a better rate – or better loan conditions – somewhere else. Bear in mind, it’s not only the ‘big four’ banks; there are loads of smaller banks and non-bank lenders in the market.

Your broker can assist you to determine the best loans for your circumstances, negotiate with lenders on your behalf, and discuss home loans that have features that could be important to you.

If you prefer more flexibility in your loan, for instance, they might advise switching over to a mortgage that lets you make unlimited additional repayments, or a loan that has a redraw facility and an offset account. On the other hand, you may want to stick with your current loan but access your equity for an investment property.

After you’ve determined what you want from a new home mortgage, your broker will check your financial situation to estimate the amount you can borrow.

Submit your application

Your broker normally collates all the paperwork and manages lodgement. Ensure that the terms of the loan have been explained to you, and ask questions if anything is obscure. You should understand:

• the length of the new loan
• features of the new loan, such as a redraw facility or offset account
• the interest rate of the new loan
• what your repayments will be on the new loan
• all fees and charges linked with refinancing, including exit fees, start-up fees, new loan establishment fees and settlement fees
• any applicable government charges.

Approval

Once your application is approved, you will receive a letter of offer along with the contract for your new loan. After signing the contract, you will reach settlement. Your new home mortgage is then drawn down, which means the funds from your new loan are used to pay off your existing home loan.

The Discharge of Mortgage document will be registered with the Land Titles Office for you. Your new lender will lodge a Discharge of Mortgage document with the Land Titles Office. At this point you can start making repayments on your new loan. Don’t let the approval process worry you – it may seem convoluted, but if you’re using a broker it essentially happens behind the scenes.

It’s a smart idea to review the home loan market at least yearly, to ensure your home loan is still the best option for your requirements. When you do this, you should consider speaking with a mortgage broker so you make a well-informed decision.

For all of your mortgage and mortgage broker needs, contact one of the friendly staff today at Go Mortgage. We have a variety of lenders to choose from to find the right loan for your circumstances. Contact Go Mortgage today on 1300 855 244 or visit https://www.gomc.com.au