How fast can you refinance?

Refinancing your home loan can have its upsides. You may want to take advantage of lower interest rates, consolidate your debt, or to tap into your home equity. But refinancing can also become a long process.

*iSelect is the trading name of iSelect Mortgages Pty Ltd (ABN 86 148 217 181). iSelect Mortgages Pty Ltd is a credit representative (Credit Representative 400540) of Auscred Services Pty Ltd (Australian Credit Licence 442372). iSelect provides a referral to Lendi Pty Ltd, a Credit Representative of Lendi Group Finance Pty Ltd (Australian Credit License 442372). iSelect Mortgages Pty Ltd receives a commission from the Licensee for each new customer account created and for each home loan submitted through this service.

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This article will suggest ways you could improve your chances of getting refinanced quickly.

What is refinancing my home loan?

Refinancing your home loan is basically taking out a new loan in order to pay off your existing loan. Refinancing can have many benefits, such as getting a better deal on your home loan, saving you time and money when paying off your mortgage.

Why might I want to refinance quickly?

As we said above, refinancing your home loan can save you money. So, the quicker you refinance, then the more money you may be able to save. Here are some examples of why you may want to refinance quickly.

  • To take advantage of current low variable rates to save money.
  • To lock-in a low interest rate deal which is currently available.
  • You have extra funds and need an offset account, or redraw facility, which your current loan doesn’t offer.
  • Your current loan is coming out of its fixed interest rate term.

How long does it take to refinance?

The refinancing process can vary between lenders. Some lenders may approve your refinance application in about a week, whereas others might take a month or more.

It can also depend on your situation as a borrower. If you require a more complex loan, or are a self-employed borrower for example, things may take a little longer.

So, it’s always good to allow extra time for refinancing. That way you are prepared, if necessary, to continue with your existing loan and repayment schedule.

What can lengthen the refinancing process?

Of course, even if you think you’ve done everything you can, there are still things which can hold up your application. Things such as:

  • Your lender asks for more documentation. For example, they may need more payslips, or more tax returns than they originally asked for. You can try to be prepared, by having these ready to go.
  • You don’t submit the requested information fully. Make sure you send all the requested documentation when you submit your application.
  • Errors in your application. It’s always worth double checking that you have filled in all questions correctly and fully.

What can I do to help my application to refinance?

It’s fairly simple really. Here’s a few things you can do which may assist this process:

  • Don’t make errors on your application form. Check, double check, triple check.
  • Be ready with all required documentation. By quickly uploading or providing your relevant documents, you save time, and put the ball in the lender’s court.
  • Provide thorough documentation to support your application. Don’t leave the lender with any questions.
  • Speak to a mortgage broker or financial advisor who specialises in home loans for more advice.

What are the typical costs of refinancing?

With good planning, refinancing can save you money. But there are fees you should look out for, as these can affect the overall viability of whether or not refinancing makes sense for you.

  • Set up/ Application fees. Check what fees you’ll be up for if you’re signing up with a new lender. If you’re refinancing with the same lender, you may be able to negotiate a better deal with these fees.
  • Break fees may apply if you are refinancing a fixed rate home loan before the fixed period expires.
  • Lenders Mortgage Insurance (LMI) may be charged if your home equity is less than 20%.
  • If you refinance and add on loan features like an offset account, for example, you may be charged monthly or annual usage fees.
  • Your existing lender may charge discharge fees to cover the legal and administrative costs of opting out of your loan early.
  • Other fees like late payment or default fees. The best way to avoid these is to maintain a consistent payment record.

What are the benefits of refinancing?

As mentioned earlier, the overarching benefit of refinancing is saving money, but here the things you may want to consider:

  • Own your home sooner by cutting down your loan term.
  • Get a lower interest rate and potentially reduce your monthly payments.
  • Change to variable or fixed rate loan. You may want the flexibility of a variable rate, or the certainty of a fixed rate loan. It’s your chance to choose.
  • Get flexible features like redraw, an offset account and the ability to make additional payments.

What are the downsides of refinancing?

If done carefully, with professional advice if necessary, you should be able to avoid many of the downsides, but these are some things you could watch out for:

  • Time. It can be a process to go through, you have to work out whether the savings you make will be worth it.
  • Additional fees may apply, so check the fine print.
  • Don’t be tricked by a honeymoon rate as it could go up higher than your original rate in a year or so.

For more information on the whole process, and things to watch out for, see the government’s Moneysmart website.

What do I need to show to be eligible to refinance my home loan?

As with any loan, you will be required to provide personal details including:

  • Proof of identity and citizenship.
  • Details of any dependents and your relationship status.
  • Employment details, over a number of years.
  • Details of your assets, existing debts and ongoing expenses.
  • Bank statements,
  • Superannuation details.
  • Wage slips of proof of your recent income.
  • Recent ATO tax returns.

How do I compare my refinancing options . . . quickly?

At iSelect we’ve partnered with Lendi to make it easier to find a great deal on your home loan*. Click here to get started comparing from a range of lenders online, or give Lendi a call on 1300 186 260.

Last updated: 07/07/2022