Refinance your home loan
A step by step guide on what you need to consider with home loan refinancing
When was the last time you took a long hard look at your mortgage? Maybe you’ve had your current home loan for some time, or maybe your circumstances have changed since you first took out your mortgage. It’s also possible you may have seen a lower rate elsewhere, either way making the decision to refinance your home loan could be a good idea. Refinancing could potentially save you thousands in repayments with a lower rate and added financial flexibility to suit your lifestyle change.
Our guide to refinancing your home loan
The journey to refinancing your home loan is similar to venturing into the great unknown and can be filled with endless challenges and difficult decisions that need to be made. We’ve gone to great lengths to break down the jargon barriers and help you navigate your home loan refinancing journey with ease.
Here are some of the benefits of financing with us when you’re buying your first home:
- Speaking to the same person every step of the way
- Access to our competitive home loan rates
- 100% certified sharia compliant
What to consider when refinancing your home loan
First steps to refinancing your home loan
Refinancing your home loan can be a life-altering venture with many highs and lows along the way. Either way, we’re here to help simplify the process.
Here are some key points to consider when refinancing your home loan:
- Understand if early termination fees might apply
- Know how much you could potentially save over the life of the mortgage
- Research what other home loans are available
- Do you want to shorten or extend your home loan term
- Are you wanting to consolidate multiple debts
- Know if you’re freeing up equity for a new purchase
- Understand what your new monthly repayments will be
- Know what your settlement costs will be and what government fees will apply
- Decide if your new home loan will be fixed, variable or a combination of both
Understand what home loan refinancing is
Home loan refinancing involves negotiating a better deal with your current financial institution or taking out a new home loan with a lower interest rate to help you save on your monthly repayments. It’s a good idea to have an annual health check on your home loan to review whether the interest rate and loan features are still suited to your needs.
Some great reasons to refinance include:
- Save money on your monthly repayments with a lower ijarah rate
- Consolidate your personal loans, credit cards and other debts into your home loan. While you’ll be paying a lower ijarah rate, making extra repayments to your home loan will help you pay it off sooner
- Access the equity in your home for investment purposes, renovation or to achieve your personal goals
- Take advantage of loan features that can add flexibility to your home loan
Know what costs are involved with refinancing
Your upfront and ongoing costs
When refinancing your home loan it’s important to consider all your expenses, including not only the more obvious upfront costs, but also the ongoing costs too.
- Exit fees – otherwise called discharge fees
- Break fees – otherwise called mortgage deregistration fees
- Start-up/ new home loan application fees
- Lender’s mortgage insurance – insurance that credit providers take out to protect themselves should the loan not be repaid
- Stamp duty – when refinancing you may be liable to pay stamp duty. We’ve got our stamp duty calculator here
- Settlement fees
- New monthly mortgage repayments
- Direct debits – when switching lenders be mindful to also update any existing direct debits, as failure to make payments could result in last fees
A lot to read?
We understand there is a lot to read but we want you to be fully ready to buy your home. Before you continue reading the next few steps, perhaps do the following:
Or you can simply continue due to the excitement of buying your first home.
Approval for your first home loan
When you’re applying for a refinancing home loan we will assess you on many factors. One factor will be what equity you currently have. The assessment will be broken down into three categories; what you earn, what you owe, and what you own. Your eligibility to qualify for refinancing will also take into account the specific home loan you’re applying for.
Some of the factors we will assess you on during your home buying journey:
What you earn
- Salary – you’ll likely need to supply two of your most recent payslips as proof of employment
Investments – any earnings from shares, managed funds, we will likely require proof
- Rental income – if you receive rental income you will likely need to supply statements
- Government income – if you receive government support
What you own
- Savings eg. a term deposit amount
- Substantial personal assets eg. a car
What you owe
Credit cards or loans eg. students debts, leases
Here are some important documents you’ll need as proof of identification:
- Current drivers licence and/or current passport or birth certificate
- Council rates notice, credit card, debit card, Medicare card, health care card
Other considerations when refinancing your home loan
When making the choice to refinancing your home loan there are some other considerations you may want to think about when making your final decision.
Some considerations to keep in mind when selecting your refinancing home loan:
- Making additional repayments – could be another way to help you save on ijarah over the course of the loan and also another way to help you pay off your finance more quickly
- Repayments frequency – understand if making payments more regularly (weekly or fortnightly) if better than making the standard monthly finance repayment
- Consolidate your loans – it’s probable you’ll save money if you’re only paying one set of fees and charges
How to refinance your home loan with Hejaz
Compared to the first time you applied for your home loan, refinancing your home loan is a much easier process. Here’s a simple breakdown on the home loan refinancing process:
- Get started online – starting your application process couldn’t be easier. You can also visit your local branch or call us to chat to our home loan experts.
- Finance application – we’ll guide you on all the necessary information and documentation you need to complete your loan application.
- Finance approval – once your loan has been approved, it’s time to notify your current lender that you will be discharging your home loan.
- Finance settlement – we will meet with your current lender for the home loan settlement.
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