If you’re looking to ditch your old bank, get lower mortgage repayments and possibly save hundreds of thousands of dollars in home loan interest but are wondering how to do it, then keep on reading. In this article, we’ll give you the 7 steps on how to refinance your mortgage so you can save the most time, stress and money when it comes to refinancing your mortgage.
Watch Instead: How to refinance your mortgage
Step 1. Seek advice from a professional
The number one factor that is going to make your experience the most hassle-free and save you the largest amount of money is how you start your refinancing process. Do yourself a favour, and get advice from a professional, like a Mortgage Advisor, as they are experts in this field. They’ll be able to assess your mortgage and let you know if you’re actually going to benefit from this refinance i.e. will it actually save you money, lower your repayments, and outweigh the break fees/other fees at your current bank when switching. They’ll also able to look at which banks are more likely to approve you mortgage loan; saving yourself hours and hours of research in bank jargon, break fees, different banks’ interest rates and whatever else you need to become an expert in in order to refinance your mortgage. Last but not least, the benefit of using a Futurebound Mortgage Advisor means that they will give you important structure advice that’s going to save you hundreds of thousands of dollars. We’re talking $280,000 on average in interest payments.
Step 2. Make sure you can get approved
The second step when it comes to refinancing is being able to look at your finances and make sure that you can get approved. Those who haven’t refinanced before may be surprised by this, but a refinance is a whole new mortgage, so you get assessed as if you were buying a house. The bank is going to want to make sure that you aren’t a risky move for them. Your Mortgage Advisor will be able to judge whether you’re ready to refinance and if you’re not ready, will provide you with other options while you get your finances in order so you can look good to the bank when refinancing.
Step 3. Put in that application
If you’re ready to refinance, go ahead and put through your application. Be as thorough as possible with your salary, expenses, debt and assets and all other details on your application as doing it right the first time leads to a lot less pesky follow up questions. Any queries or questions regarding your application? You Mortgage Advisor will be able to talk you through the application and answer any questions you may have.
Step 4. Get approved
Step number four is to obviously get approved for your new mortgage. You’ll get a pre-approval letter just like you did when you first bought your house. This pre-approval letter will also outline your new bank’s conditions that need to be satisfised prior to your mortgage approval and how much you’ve been approved for. For those who aren’t aware, when your new mortgage loan gets approved, the money gets paid out to your old bank and pays for your previous mortgage.
Common question: Can I apply for a new mortgage in my banking app?
As your new mortgage is with a completely different bank, it’s not possible to do this through your banking app. People commonly get confused between refixing (staying with your current bank) which can sometimes be done through your banking app and refinancing (moving to a different bank) which cannot.
Step 5. Meet the banks conditions
Step number five is to meet the bank’s conditions. Because it’s a new mortgage, it’s a new application, you still need to meet whatever conditions that the bank gives you for this new mortgage. Conditions can be anything, but the most common ones are a signed sale and purchase agreement, confirmation of insurance on the property, and a registered valuation of the property.
Step 6. Choose your home loan structure
Step number six is to choose your mortgage structure – this is where working with a Futurebound Mortgage Advisor makes it so much easier and can help save you A LOT of money in interest repayments. Our brokers can advise on what the best structure is tailored to your unique financial situation and will help you implement it with the bank. Our Financial Coaches can also help you come up with a plan on how to pay your mortgage down faster so that you’ll be paying a lot less in interest costs over the long term – we’re talking $280,000 on average over the lifetime of your mortgage.
Step 7. Seek some legal advice
Remember that this is a whole new mortgage so getting a lawyer to look over your new loan documents and contract is important. Most banks are giving cash contributions currently so these can sometimes be used to cover your legal costs.
In summary, use an expert! You will save the most time, stress and money by using the expertise of somebody who does this all day, every day. Mortgage Advisors are there to have your back, so you’re not just one person alone going against the bank and trying to save the most money to further your financial goals. If you want that type of expertise on your side, then book a 15-minute mortgage chat below so we can assess your mortgage and see if you are ready to refinance now. And if you’re not, we’ll give you a plan for what you need to do so you can start refinancing.
Keep in mind this article is providing general information and not individual financial advice.