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Once you’ve purchased a property and have a home loan, one of the perks is that you already have experience with the home loan application process. This firsthand knowledge can be incredibly valuable when it comes to refinancing your mortgage to obtain a lower interest rate, pay it off faster or save money over the long run.
Laying the groundwork
Refinancing is a big commitment, but it could be worth the potential financial gain. You'll be paying off your current loan to replace it with another that may benefit you more. You may want to re-finance to gain access to a product that offers unlimited repayments, a redraw facility or simply to get a better interest rate.
Just like your first home loan, research will be key in guiding you to the right decision. First and foremost: compare what you're paying each month to what you might be paying under other potential home loans that might be available to you. Depending on when you initially took out your home loan, the rates could be higher or lower than what you currently have.
Once you get an idea of what you could save over the term, you should factor in the various fees that are associated with refinancing to ensure the outcome is financially beneficial. These include:
- Costs associated with closing your mortgage
- New lender application expenses
- Legal fees
- Potential appraisal costs if your home value is suspected to have changed.
At this juncture, it’s important to gather the right documents to apply for your new home loan. These typically include sufficient personal identification, income documents, statements of your current home loan and details about your current assets and liabilities.
As easy as one, two, three
While you can refinance with your current lender, it's not always the most beneficial option. Once you've done your research and found the right home loan for you, contact that bank to meet with a specialist to make sure all the numbers add up. Don't let a busy schedule get in your way - there are mobile lending specialists that can meet you at a location and time that suits you.
Once you find a new loan, you'll submit an application for the new home loan just as you did when applied for your previous loan. A good loan specialist will work with you to make sure you have an excellent understanding of what costs are involved in refinancing to your new lender.
It’s a wise decision to be familiar with, and to take advantage of the features you're refinancing for early, such as making additional repayments to pay down the principal amount quicker. Looking for guidance through the refinancing process? Contact an IMB Bank representative today to learn more, or look further into the refinancing process.
