Refinancing Home Loan

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With new pricing mechanisms constantly being introduced into the home loan market, it pays to be informed of the latest products. Refinancing one’s home loan can often be daunting for some customers who are more or less content with their existing lender because they fear change. However in most cases, the current mortgage you have can be improved.

A person should consider re-looking at their mortgage for the purpose of refinancing every 3 – 4 years. This is because individual circumstances will change within such a period, and one must also have a good look at his finances. Hence refinancing can be cost effective, especially if a better mortgage exists. The time taken to complete a refinance is usually 3-6 weeks from lodgement to settlement date.

Some major lenders have introduced a fast settlement process whereby they immediately payout the outgoing lender after mortgage documents have been signed within 5 days. This policy is commonly known as rapid refinance and is available with 4 major lenders.

There are many different specialized aspects to refinancing. Nonetheless, when a new lender takes on a refinance, they conduct an affordability test (serviceability). The second thing a lender considers before approving a refinance is the conduct of the existing loan with the existing lender. A lender does this by looking at the previous lender’s loan statements. In this case, the new lender is usually looking for good/satisfactory conduct of the existing loan.

Is it possible to refinance a loan without showing loan statements of the previous lender?

This is possible to a maximum of 75% LVR. This policy is also known as refinancing without showing previous lender loan statements. This policy can be found with a handful of lenders in Australia.

This policy is helpful when a client cannot find his home loan repayments, or has been late on several instances within the last 6 months or so, but has made up for the late payments and needs to change lenders for some reason. Under this policy, a person can also consolidate 3 other personal debts like a credit card, personal loan and car loan.

How many statements does a lender require to verify conduct of the existing debt for refinance?

This depends on the lender. As mentioned above, there are a small number of lenders who will not require the statements of the existing outgoing lender for a refinance. However, some lenders accept the last 3 months loan statements, but most lenders will require statements of the last 6 months.

A client might seek a lender with the 3 months policy for refinance, because in the previous 4 months he could have been late for a repayment. This late payment therefore can hinder his ability to refinance. This policy is known as refinancing showing 3 months loan statements.

Can I refinance or consolidate other debts into my home loan?

This is possible, and advised in most circumstances. As a home loan interest rate is generally the cheapest type of interest rate compared to a credit card, a personal loan, or a car loan, it can save a client thousands of dollars by refinancing and consolidating these debts into one.

Can I be Low doc and refinance?

This is possible. There are no issues with refinancing a low doc loan. Further there are no issues with refinancing a loan into low doc loan as long the applicant meets the lenders criteria.

Can I refinance a loan with many late payments or arrears?

There are some lenders which will refinance arrears or late payments. Some lender will have a limit as to the amount of arrears they will consider in a refinance. Other lenders can accept unlimited arrears, and still approve your loan with valid reasons being made as to the conduct of the loan. The lender who will refinance this type of loan is also known as a non conforming lender. There are approximately 9 lenders that specialize in arrears refinancing, and they usually charge a higher rate than a conforming lender like a bank.

Can I refinance a loan if I have bad credit or a default?

Refinancing with bad credit and or defaults is possible.This can be done using a non conforming lender. Some lenders allow you to refinance your home loan with paid and even unpaid defaults registered against you CRAA or Veda report. In some cases, lenders can/will ask you to have these defaults paid on settlement of the new refinance loan, but not all will.

In the 10 years Mortgage Providers has been operating, we have built a solid reputation as the ‘refinance specialists‘ having refinanced hundreds of millions of dollars worth of loans. The savings we have created for our clients by helping them refinance their mortgage is astronomical to say the least. These savings range from 0.04% to 3.7% pa of the previous outgoing lenders rate.

The average life span of a mortgage before one considers refinancing is 4.5 years.  When contemplating whether to refinance, ask yourself the following questions:

  1. Am I going to be better off?
  2. How much will I be saving?
  3. Will I be comfortable with my new lender?
  4. Am I applying for a better loan product?
  5. Are there any exit fees to consider on my existing loan?

With new pricing mechanisms like professional package loans constantly made by lenders to attract new customers, you could have lost thousands with your existing loan.

At Mortgage Providers our consultants can analyze hundreds of loan packages and compare them to your existing one. In the majority of cases you would have lost thousands in lost interest with your existing product. In other cases, a different lender could be offering you the same or better loan at a much cheaper rate.

You don’t need to shop around to refinance, simply contact Mortgage Providers and we will make the transition worth your while.