When to Refinance Your Mortgage

Is There Ever a Bad Time to Refinance?

Deciding to refinance your mortgage or stick with your current loan isn’t always straightforward. It requires research, advice, and comparison to determine if it’s the right move for you. Here are some steps to consider before deciding to refinance:

1. Get Professional Advice.
2. Evaluate Your Current Financial Situation.
3. Use a Refinance Calculator to compare your options.
4. Understand the Pros and Cons of Refinancing.
5. Learn About the Steps and Fees Involved in Refinancing.

When Do Most Homeowners Decide to Refinance?

While the main reason people refinance is to secure a lower interest rate, there are other factors to consider. Homeowners often think about refinancing when their fixed-rate term is ending. Additionally, many consider refinancing every 3 to 4 years, even with a variable rate, as they may have reduced their loan balance and seen an increase in property value, making it a good time to look for better rates or more flexible options.

Other reasons to refinance include the need to release equity for purchasing an investment property or consolidating debt by combining existing debts into the home loan, typically at a lower interest rate.

We know the best strategies to optimize your home loan and the ideal time to switch lenders. Call us at 1300 GET LOAN or book a consultation to start your refinancing journey today.

How to Know if You Are Eligible to Refinance

• You owe less than 80% of the property value: Ideally, your mortgage should be less than 80% of your property’s value to avoid paying Lenders’ Mortgage Insurance (LMI).
• You are on a variable rate: You can refinance every 6 months, but each application will add an inquiry to your credit file.
• You can refinance from a low doc to a full doc: If you had a low doc mortgage but now have enough income evidence, you might qualify for a standard home loan with a better interest rate.
• You can refinance out of a bad credit loan: If your Loan-to-Value Ratio (LVR) is 80% or less and your credit has improved, you can refinance a bad credit home loan back to a major lender.

Refinance Your Home Loan in Easy Steps

1. Understand the Situation: Refinancing your home loan can be challenging. Check out our refinance guide to help you get closer to paying off your loan faster and for less money.
2. Know Your Savings: Contact our mortgage experts to see how much money and time you could save by refinancing.
3. Apply for a Refinance: Schedule an appointment with a Home Loan Experts mortgage broker to explore your refinancing options by calling 1300 GET LOAN or booking a consultation call. Once we help you choose the best loan for your needs, we’ll handle all the details for you.

How Frequently Should I Refinance My Home Loan?

It depends on your financial situation and goals. If it’s your family home and you’re not planning to move, consider refinancing at the end of your fixed term. If you have a variable rate, you can refinance anytime. This is often useful for investment properties when you want to access equity to grow your portfolio. For example, even if you settled your home loan three months ago but found a new investment opportunity, you might want to refinance to use your equity. Your current lender might not allow this, but another lender might be able to help.

Does It Make Sense to Refinance During a Fixed Term?

Yes, you can refinance your loan during your fixed loan term. You might have to pay break costs, but if you recoup these costs within two years, it might be worth it. Use the refinancing calculator to see the costs versus savings, how much your monthly payment will change, and how long it will take to recover any fees and break costs. It’s a good idea to talk with an experienced mortgage broker to fully assess your financial situation.

Alternatives to Refinancing

Refinancing can be costly and time-consuming, especially if you’re switching lenders. Here are some alternatives if refinancing isn’t right for you:

• Negotiate With Your Bank: If you want to lower your interest payments, call your lender to see if you can negotiate a lower interest rate or fix your repayments for a specific time.
• Extend Your Loan Term: Consider extending your loan term to reduce your mortgage repayments. For instance, instead of repaying your home loan over the remaining 27 years, you could extend the term to 30 years.
• Switch to Interest-Only Repayments: Temporarily switching to interest-only repayments might be an option, especially for those on parental leave. This reduces your repayments and frees up cash flow to pay off higher-interest debts or build up your offset account, providing a buffer against interest rate rises. An offset facility also allows you to access these funds easily if needed.

Keep in mind that these options should be considered short-term solutions, as they can make your mortgage more expensive in the long run. You can explore more ways to lower your repayments without refinancing.

Not Sure When is the Right Time to Refinance?

Our refinance checklist will help you gather all the necessary documents for your refinance application. We can assist you in running the numbers to see if refinancing makes sense for you. Call us at 1300 GET LOAN or book a consultation call to speak with one of our home loan refinance specialists today.

Frequently Asked Refinancing Questions

When should I consider Refinancing?

According to our mortgage specialists, you should consider refinancing your mortgage if any of the following apply to you:

• Interest rates are falling.
• Your home’s market value has significantly increased.
• You want to renovate your home or invest in a property.

Our experts will review your mortgage situation and help you decide if refinancing is the right choice for you. Give us a call at 1300 GET LOAN or schedule a consultation call today.

What are the documents required?

Refinancing is very similar to applying for your original loan. Most lenders will ask for the following documents:

• Recent pay slips to verify your income.
• Most recent tax assessment notice.
• A pay confirmation letter from your company.
• Identification documents, like your driver’s license or passport.
• Financial and credit documents (credit card statements, current mortgage documents, bank account statements, etc.).

If you’ve decided to refinance, we recommend having these documents ready. A Home Loan Experts broker can help you with this, saving you time and hassle.

How long does the refinancing process take?

The time it takes to refinance depends on your lender and how quickly you provide the required documents. Usually, the process, from applying for the loan to your new lender arranging the transfer of debts with your current lender, can take between two and four weeks.

Does refinancing affect the credit rating?

Yes, refinancing is seen by lenders as a credit application. Doing it often can lower your credit score. Also, if your refinance application is denied, it can also affect your credit rating. Talk to our mortgage brokers to learn how to protect your credit score while refinancing.

What are the costs to refinance a mortgage?

Refinancing can be costly. You might need to pay break fees to get out of your current mortgage, especially if you’re close to the end of a fixed-rate term. Your new lender might also charge you an application fee and closing costs.

How frequently can I refinance?

There’s no rule about how often you can refinance your home. But some lenders might want you to wait before you refinance again. They might need you to wait a few months after closing on a loan or after refinancing before you do it again, usually at least six months. Refinancing a lot can also lower your credit score. Talk to a Home Loan Experts mortgage broker to learn how refinancing could impact you.

Is refinancing and topping up your loan the same thing?

Refinancing and loan top-ups are two different things, each with its own benefits. To be clear:

• Refinancing means switching to a new home loan.
• Loan top-up means increasing your existing home loan and paying it off over a shorter term.

Decide which option suits you best. Just remember, most fixed-rate loans don’t allow top-ups.

Who should I refinance with?

This question confuses a lot of people who are trying to refinance. But we have a solution. Different lenders offer different refinancing options based on your situation. Our mortgage experts will search over 50 lenders to find the best option for you. Talk to one of our brokers today.