Unloan’s 6 step guide to refinancing and how it works

Decided it’s time to refinance your home loan, but not sure where to start? While the refinancing process looks similar to applying for a new home loan, there are a few key differences that set it apart.

1. Choose your new home loan

When it comes to refinancing your home loan, the first step is to do your research and choose a new home loan. Part of choosing the right home loan involves understanding your primary motivation for refinancing in the first place.  

• Are you looking for a better interest rate?
• Maybe you’re keen to access new and improved features and facilities.  
• Or do you want to access the equity you’ve built up in your home?

Knowing the why behind refinancing can help you to find the best new home loan for your needs. Learn more about the benefits of refinancing and if it’s right for you here.

While we’re on the topic of doing your research, it’s also worth looking into any potential fees you could be hit with when it comes to setting up a new loan and even closing your old loan. From application and establishment fees to discharge or break fees, knowing the costs can also help you figure out whether refinancing is worth it.  

It’s important to compare the different home loans you’ve found based on a variety of factors, including the interest rate, the comparison rate, the features offered and any other factors that are important to you. It often helps to use a mortgage calculator to work out how much you could save and what your repayments would look like with the different loan options. From here you’ll be able to confidently narrow down the options until you settle on the best choice for you.

2. Apply for your new home loan

Once you've picked a home loan that suits you best, it’s time to apply. In most cases, you’ll need to gather a few documents as part of the application process. This can include items like:

• Pay slips
• Personal ID documents
• Bank statements, and  
• An overview of your expenses, assets and liabilities

In some cases, the new lender might also require a property valuation to determine how much your home is currently worth. Learn more about applying with Unloan here.

3. Get approved for your loan

Once you submit your application, a lender will assess your application and if you meet their lending criteria, your application will be approved. Once your application is approved, they’ll provide you with a new contract and mortgage documents. As part of the process, your new lender will assess the value of your home to work out the loan-to-value ratio (LVR).  

If it’s less than 80%, you’ll need to pay lender’s mortgage insurance (LMI) to your new lender, even if you already paid it when you first bought the property. Unfortunately, LMI can’t be transferred across lenders, so it’ll need to be settled again if your LVR is less than 80%.

4. Sign on the dotted line

Once you’ve reviewed the details of your new loan and you’re happy to go ahead with it, sign on the dotted line. Once you’ve given the new lender the green light, they’ll get the ball rolling on setting up your new home loan, and discharging or closing your old loan. Learn more about settling your Unloan here.

5. Discharge your old loan

Your new lender will get in touch with your old bank to arrange the discharge of the original loan. In most cases, you’ll need to complete a discharge of mortgage document with your old lender to let them know that you’re refinancing with a new lender. Learn everything you need to know about discharging your mortgage here.  

From there, they’ll arrange to close your old loan. Depending on your individual circumstances, you might be charged a break or discharge fee by your previous lender, so it pays to be aware of costs like these before you start the refinancing process. Learn more about factors to consider before refinancing here.  

6. Settling your new loan

Once the discharge details have been finalised, your new lender will let you know of the settlement date and the final payout figure. They’ll also tell you when you’ll need to start making repayments towards your new loan. The new lender will essentially pay out your old loan and transfer the mortgage across. The whole refinancing process can take anywhere from a few days up to 6 weeks, so it’s worth being organised, especially if you’re going to be rolling off of a fixed-rate mortgage.

At Unloan, we like to keep things simple, which is why we offer low variable rates that are designed to save you more. With no application fees, no account-keeping fees and no annual fees, there’s plenty to love about Unloan. Find out more about Unloan and your eligibility today.  

This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍

Unloan is a division of Commonwealth Bank of Australia.

Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).

Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.

*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.