Everything you need refinancing your home

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With official interest rates rising repeatedly and driving up home loan rates, mortgage refinancing has surged to record levels as Australian homeowners look for a way to manage their financial situation. Total refinancing for owner occupiers and investors in January alone amounted $18.6 billion, according to the Australian Bureau of Statistics.[1]

If you are facing an escalation of home loan costs due to rising interest rates, you may be considering whether to switch. Here’s a guide to help you understand if refinancing makes sense for you, and how to go about it.

WHAT IS A HOME LOAN REFINANCE?

In simple terms, refinancing involves moving from one loan to another, either with your current lender or a new one. The new loan would typically have a lower rate of interest or offer better features.

WHY WOULD I REFINANCE?

You may want to refinance because there has been a change in your personal circumstances, or because you simply want a better deal on your home loan. Refinancing can be an effective way of managing your money. It may allow you to secure a better interest rate on your mortgage, consolidate debts, pay off a mortgage faster, change your loan type (such as from fixed to floating) or unlock equity in your home.

It may also be that you switch in order to change lenders. When we first take out a home loan, few of us know what we’re going to get. Refinancing can allow you to find a lender with lower interest rates or better customer service. Police Bank offers both.

HOW DOES REFINANCING WORK?

Once you’ve decided to switch, the process is usually relatively straightforward. After you’ve chosen a loan, submitted your application and been approved, your new lender will probably handle the rest. They will likely want to see proof of your income, living expenses, and a few of your latest loan statements. They’ll likely also organise to have your home valued before you secure your new mortgage.

Assuming it all goes smoothly, your new and old lenders will arrange for your new loan to pay out your existing loan. From here, you start making repayments against your new loan.

6 Factors To Consider Before You Switch

Before you refinance, work out whether you’ll save money by refinancing your mortgage. To help with your decision, consider these factors, to ensure the benefits outweigh the costs:

Will your lender give you a better deal? Refinancing doesn’t have to involve moving to another lender. Ask your lender if they can provide