Refinancing your loan can help save you thousands of dollars over the life of your loan especially if you’ve already made a few years worth of repayments and built up that usable equity. Although it is the main draw for most borrowers, refinancing is not only about lowering your interest rates, but has a myriad of other benefits that include the ability to improve the loan term, switch loan types, access different loan features, and consolidate your overall debt.

We always recommend maintaining the habit of reviewing your home loan rate and asking the question (to yourself and to your mortgage professional) if there is a better deal for you. In this article, we go over a few tips to better prepare you when you refinance your loan.

Don’t be one of those people who don’t know their current loan situation. Ensure you know your interest rate, remaining loan term, and monthly repayments as a start. These are key figures to keep in mind when shopping around for another loan product.

Why do you want to refinance in the first place? Lowering your interest rate might be a given, but as we said earlier, there are other outcomes to seek out. 

For example, a refinance allows you to access equity built through years of repayments that can be used for renovations or even to invest in another property. 

Others may choose to shorten the loan term (if possible) so they can pay off their loan quicker.

Some may value more predictability with their loan repayments and switch from a variable rate loan to a fixed interest rate loan.

It is also important to consider other loan features such as a redraw facility or an offset account that can offer further benefits of flexibility or lower interest paid in the long-run. Just remember that the refinance also gives you the opportunity to remove unwanted loan features you may be paying extra for.

You’ve applied for a loan before, so you know that lenders are required to know their customers and check their financial background. Understanding all these details about your financial history will better equip any mortgage professional you speak to so they can give you more tailored recommendations. Depending on the loan you are applying for, have at least the basics ready such as payslips, tax returns, current loan statements, and identification documents. Whoever you speak to will probably require more information, but it pays to be organised from the start to streamline the process down the line.

Now that you know your current loan situation and have clear refinancing goals in mind, it is time to see what the market has to offer. Understand your current interest rate, relative to the market so you know what you’re able to achieve when shopping around for a better rate. Online comparison tools such as Yourmortgage put different loan products side by side to compare interest rates, loan features at a given loan-to-value ratio and more.

Engage with a mortgage broker as they can offer insights tailored to your financial situation and help you make informed decisions. It is their duty as lending professionals to recommend you products that suit your financial needs best so it is optimal to make the most out of their services. Through your own market research, you can best explain the loan product you are after, and the mortgage broker can then provide you with application costs, exit fees, and a holistic view into whether the refinance is worth your while.

Speak to your current lender to see if they can offer you a better deal, now with the leverage of other lending options available. Simply explaining you want to refinance your loan away from them can spark them to offer you discounts or improved loan terms. If they are not able to give a more favourable proposition, don’t fall into the trap of ‘loyalty tax’ that keeps you spending more than you need to and action that refinance right away!

Refinancing your home, investment, or SMSF loan can be a strategic move to enhance your financial position. By setting clear goals, researching the market, and seeking professional advice, you can navigate the refinancing process with confidence. Speak to a member of our team today by calling 13 WLTH or emailing us at hello@wlth.com.

Any advice provided is general in nature and should be considered in line with your financial situation, needs and objectives.