Refinance your home loan
Thinking about refinancing your mortgage? Here are the key steps to get things underway.
Step by step guide to refinance 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.
Assess your current situation
First and foremost you want to be clear on why you’re refinancing – what is it about your current home loan that isn’t working for you? Perhaps you’re after a lower rate or more flexibility. You may have to pay some fees to leave your current home loan, so being clear on the benefits your new home finance will bring can help you decide whether the switch is worth it.
What to consider when 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 finance will be fixed, variable, or a combination of both
Compare home loans
When looking at new home loans it’s important to compare more than just the Ijara rate. Look at all the fees and charges associated with the finance, as well as features and add-ons that are important to you, for example, a redraw facility or offset account.
It’s a good idea to have an annual health check on your home finance to review whether the Ijara rate and finance features are still suited to your needs.
Know the costs and your borrowing power
Your financial situation may have changed since you took out your current loan, so take the time to work out exactly what you can afford. A lending specialist can talk you through each home finance in detail and assess whether a switch will help you save money over the long term. 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
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, or 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 driver’s licence and/or current passport or birth certificate
- Council rates notice, credit card, debit card, Medicare card, health care card
Settlement 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 of the home finance 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 with our home finance experts.
- Finance application – we’ll guide you on all the necessary information and documentation you need to complete your finance application.
- Finance approval – once your finance 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 finance settlement.
Ready to proceed?
Whether you want to switch to Islamic or you prefer authentic Islamic finance, get started online.
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 Ijara over the course of the finance 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