Refinance your Home Loan: The Ultimate Guide for Aussie Expats
Interest rates fluctuate from time to time – it can be quite an effort to stay on top of it all. If you have not reviewed your home loan in over a year, now would be a great time to do so and save some cash (let’s be real: the chance to set aside money that otherwise would have gone to payment of interest is too good to pass up!). The home loans market caters to many different buyers, so by switching lenders and refinancing you could potentially save thousands.
Not sure what refinancing is? No worries, we’ve got you.
Here is an ultimate guide on how you can give your home loan a health check without a massive headache.
What is it all about?
Simply put, refinancing a home loan is when you take out a new home loan to replace your old loan. You could choose to stay with your current lender and make changes to your existing loan or change to a new lender who will take over your current mortgage.
While it’s most common to refinance due to new market offerings, a small change in one’s financial or personal circumstances can also be the more important reason to make the change, such as needing cash for a new purchase or other investment-related purposes.
It’s a reasonably straightforward process. As soon as you have considered all the options made available to you by our mortgage experts, you can make your decision on which to proceed.
Get a free Australian mortgage assessment today.
Why should I refinance my loan?
Apart from saving money, there are other reasons why you must consider looking at some refinance home loan offers:
Considering to refinance your home loan – how to do it?
Those who are mulling over their next step may be asking themselves, “How do I refinance my home loan in Australia?” Below is a walk-through to guide you through the process.
- Check your rates
The very first thing to do is to verify your current interest rate against those of refinancing home loan rates and see if yours fare better. If you think that you are paying too much for your existing mortgage, it is a clear signal to refinance, given that there are better alternatives.
- Negotiate with the current lender
The next step is to sit down and talk to your current lender to negotiate for a more competitive rate. It is likely they will give you a better option if the only other choice is to refinance with them or with another lender.
- Do pencil-pushing
Do some number crunching to make sure that you are truly going after a better deal. There are exit fees and break costs involved, so remember to use a refinancing home loan calculator to scrutinise all your expenses.
Some institutions have offerings such as a refinance home loan cash-back when you decide to switch. These, among other things, will come into play in the calculations.
Other refinancing costs to bear in mind when you are thinking of refinancing are government fees, break costs, discharge fees, valuation fees and upfront fees on your new loan. With all the financial considerations, all the numbers need to be laid out before you make your final decision.
- Go for it!
When you have made sure that you will be able to save a substantial amount of money should you refinance, you can start the application process and let your lender go through the necessary documents and procedures to execute it. It would be best if you discharge your current mortgage and pay all the fees so your new refinancing can push through without a hilt.
Who has the best home loan?
Banking in Australia is dominated by four major banks: Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (ANZ), National Australia Bank (NAB) and Westpac Banking Corporation (Westpac).
Most banks offer flexible loan features (eg: the freedom to choose between a fixed and a variable rate on your repayments). What is a fixed home loan you may ask? It is a loan that can give you the certainty that you need to pay your mortgage at a single interest rate. Despite the volatility of the market, your rate is set in stone. However, for some people, the freedom provided by a variable rate is more of what they are after.
Let’s look into the offerings of the Big Four banks and examine their distinct selling points to borrowers. (Current as at August, 2021)
- Refinance home loan – CBA
CommBank instantly gives you a A$2,000 cash-back when you apply for a home loan switch with them. In addition, being a local Australian institution, they have a dependable quick support system for all their clients. They have the technology in place that can make customer servicing seamless with a virtual banking assistant and an app for easy management of your loan anytime, anywhere. They also have leading experts in their workforce to service your every need whenever necessary.
CommBank also has flexible loan features such as various free offsets and redraw to help you save money in your loan repayments and manage your funds the way you want. They also have a seamless refinance system, FASTRefi®, to help out eligible clients with their refinancing.
- Refinance home loan – ANZ
Like CommBank, ANZ also offers the flexibility you need to manage your loan, whether you plan to repay it faster or redraw on your available funds. They can provide you both the certainty of a fixed-rate loan or the flexibility of a variable loan, depending on your preference and needs. You can choose a split loan where you can enjoy what both loan types can offer.
Their Breakfree package can help you secure a line of credit with the bank and you can enjoy the absence of ongoing fees and competitive rates with their Simplicity PLUS home loan. You can go on their website and use the refinance home loan calculator to check how much you can borrow and what your repayments will look like.
- Refinance home loan – NAB
As a 150-year old Australian bank, NAB has a vast array of home loan offerings to borrowers tailored to their specific and varying needs. They take pride in developing various loan packages that will address the changing needs of their clients. They boast of a 95% LVR and LMI, which they can offer to their customers to help people become eligible for a refinance despite lacking the 20% down payment for their properties.
They also have fixed and variable home loan packages, low upfront costs, split loans, line of credit, paying interest only, among many other features.
Though there are compelling reasons to take out a home loan or to refinance with the Big Four banks, there are also real advantages to going with other lenders – it all comes down to personal preference and needs. The right lender can help you save money in fees and interest over the life of a loan. It requires a lot of research, we know, and we are here to help you do the legwork needed to ensure you can secure the best rate (ps: oftentimes the lesser known lenders have more to offer).
1. Am I eligible to refinance if I originally have a home loan bundle package?
Suppose your current home loan came as a package that includes various other features such as credit cards, term deposits, or transaction accounts. In that case, it is still possible to secure refinancing with another lender. Some even offer to take care of these things for you to help you in the switch. The necessary first step is to contact your lender of choice and talk to them about the transfer.
2. Can I change jobs while I am applying for a home loan?
The security of your employment is one of the most critical factors in your loan application. To be eligible, you must typically have held your current job for at least six months before you can apply. If your work situation changes in the middle of processing, you must inform your lender and check if you can work out a deal while you are in between jobs.
If you have been paying off your mortgage in Australia for several years, it may be a viable option for you to consider refinancing your home loan. The process will be easier than when you first applied for your home loan, and most of the procedures are quite similar, except you will be enjoying better rates and special mortgage features.
You will also be addressing a need that you may have, such as debt consolidation or lower interest rates, which are the reasons why you contemplated the decision to refinance in the first place.
Still confused, talk to us! We are always here to help- with so many options available, it makes sense that you talk to your broker.