Unloan’s expert guide to refinancing your home loan

Is your fixed rate term ending? Or maybe you want to tap into your equity to fund your renovations. Whatever your reason, refinancing your home loan can open up a world of opportunities. But just like when you first applied for your initial home loan, it can be tricky to know where exactly to start when it comes to getting the ball rolling on refinancing.

To help you navigate the refinancing process with ease, we’ve pulled together our very own expert guide to refinancing your home loan.

Understand your motivation

Before you even start looking at potential refinancing options, it’s important to understand your reasons for refinancing in the first place. By understanding your motivation and your financial goals, you’re often better placed to find a new home loan that meets your needs. From accessing your home equity to reducing your repayments or finding a more competitive interest rate, there are stacks of different reasons to refinance your home loan.

Not sure if it’s the right time to refinance? Read our blog to understand when the ideal time to refinance is for you.

Run the numbers

While refinancing can help you to save on your mortgage, switching home loans often doesn’t come without cost. When it comes to wrapping up your existing mortgage, you’ll often be slugged with a discharge fee or an exit fee if you’re leaving a fixed-term loan early. Opening a new loan also comes with its own set of expenses, including application fees, property valuation fees, settlement fees, lender’s mortgage insurance and service fees.  

With this in mind, it’s important to crunch the numbers and compare them against your current financial situation to figure out whether refinancing is the right option for you. Will it help you to reach your financial goals or will it end up costing you more than you’re already paying?

One of the best things about Unloan is that we don’t charge fees. That includes application fees, settlement fees*, account fees, transaction fees, discharge fees and exit fees.

Explore your options

Once you have a solid understanding of your financial goals and situation, you can start to look at the different lenders and options available to you. Assess your options and compare them based on several factors, including:

• Upfront fees
• Ongoing charges
• The interest and comparison rate
• Access to account features and facilities
• Customer support and service

With so many different options out there, sometimes it can be worth leaving the hard work to a professional. A mortgage broker can offer advice based on your situation and help you find a loan to suit your needs. Alternatively, you should be able to chat with a lending specialist at your bank or lender to understand whether their refinancing options will work for you. Here are a few questions that can help you decide whether the lender is right for you.

Gather your documents

Before applying for a new loan, it can be worth gathering all the relevant documents that you’ll need to support your home loan application. Lenders will assess your application based on a range of factors, including:

• Your current home loan
• Your credit score
• Proof of assets, like savings, shares, bonds, vehicles, high-end jewellery and art
• Proof of income and employment, including PAYG and self-employment, rental income and government payments
• Debts and liabilities, including existing loans, HECS or HELP, credit card debt, personal loans, lines of credit and overdrafts
• Expenses

Having these documents on hand before you apply for a loan can make the application process much easier.

Take your pick

Once you’ve picked the loan that best suits your needs, it’s time to submit your application to the lender. The application to refinance is similar to when you applied for your initial home loan. Depending on the lender you go with, you might be able to apply for your new loan online, over the phone or by visiting a branch.  

They’ll assess your application and review your supporting documents to determine whether you meet their lending criteria.

Prepare for your valuation

As part of the refinancing application process, your new lender might need to complete a property valuation on your home. If it’s been a few years since you first bought the property, there’s a good chance that the value of your home has changed. The bank will use this information to determine your loan-to-value ratio (LVR), which is used to work out how much equity you have in your property. 

If a valuer will be visiting your home to complete a full valuation, it’s worth spending a bit of time tidying up around the place and repairing any obvious damage. It’s little things like this that can help to boost the appeal of your home and hopefully, its value.

Get loan approval

All being well the lender will approve your application for refinance and send through a letter of offer and a home loan contract for you to review and sign. Take your time to read through the documentation. If everything’s in order, you can sign and return it to the lender.

Complete settlement

Once you’ve signed your new loan contract it’s time to get the ball rolling on settlement. Your new loan will be used to pay out your old mortgage. If you’re refinancing with a new lender, you’ll need to fill out a discharge form and submit it to your old lender. Once it’s all done and dusted, you’ll start making repayments towards your new loan from the date specified in your new loan contract.

If you’re on the hunt for a new home loan, why not check out what’s on offer at Unloan? From competitive rates and loyalty discounts to no fees, we’re home to a new type of home loan that saves you more.  

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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.