With the recent cash rate increases by the RBA and the threat of more to come between now and Christmas, many mortgage holders are considering refinancing their home or investment loan to reduce their mortgage repayments.

Whilst nobody likes paying more for something, it’s important to remember that the interest rates for the last two years have been at their lowest levels ever. Much like property values, we are currently seeing a correction in interest rates.

What is refinancing?

Refinancing is the process of modifying your existing finance arrangement. The reasons for changing your existing could be for many reasons;

To secure a lower interest rate to reduce your mortgage repayments
To secure a lower interest rate and receive a lender cash-back promotion
To change your finance arrangement to interest only repayment or principal and interest repayments
To change your finance arrangement from a variable interest rate to a fixed interest rate
To access available equity from your property to purchase another property
To access available equity from your property to renovate or improve/extend your property
To pay off high interest rate debt such as credit cards by incorporating them into your home loan

“Refinancing directly with a bank isn’t the most competitive method as the bank will only provide you with their products and you won’t be able to compare all the refinance options in the market.”

Refinancing doesn’t have to be daunting. The team at Mint Equity take care of the whole process, so you can relax.

How do I know I if refinancing is a good decision?

The best way to work out if refinancing is appropriate for your current situation is to talk with an experienced mortgage broker. Mortgage Brokers like Mint Equity have access to over 40 different lenders, so it’s important when considering refinancing that you are able to select from as many options as possible.

Refinancing through a bank directly isn’t a good option as the bank will only provide you with their products and you won’t be able to compare all the refinance options in the market.

You should consider the reasons why you want to refinance and ensure that the options presented to you meet those requirements.

How to refinance my home loan?

Working with a mortgage broker for your refinance makes the process incredibly easy.

By simply providing your current interest rate and loan balance to us, we will then be able to access 100’s of different lender products to see what other home loan options are available.

The next step is to check your borrowing capacity will satisfy the new lenders requirements and get accurate valuations on the property to calculate the LVR (loan to value ratio). When there is a low LVR, we are able to negotiate even bigger savings on your interest rate. Once you are happy with the new interest rate and product, the application process is taken care of by Mint Equity. We’ll also organise the discharge authority to advise your current lender that you’ll be discharging your original home loan.

“If you have easy access to your payslips, bank statements and the other documentation the lender requires, the application process can be lodged by Mint Equity within 24 hours of receiving the documentation.”

What happens if the bank increases the interest rate during my refinancing process?

If you are refinancing to a variable interest rate, you are susceptible to interest rate change. The nature of a variable rate is that it can vary. Not every bank will pass on the cash rate increases instigated by the RBA, so the best option is to reduce your current interest rate to a lower level so if interest rates do increase, you’ll have a lower starting point.

If you are refinancing to a fixed interest rate, you can choose to ‘rate lock’ the fixed interest rate during the application process. That means that once your application is lodged and you’ve selected ‘rate lock’ any interest rate increases the bank announces won’t change your agreed rate.

There is however a small cost to ‘rate lock’, but with interest rates predicted to increase over the next six months, it is a good option for those who want security.

How long does settlement take when refinancing your home or investment loan?

Most of the time-consuming aspect is collating the documentation for the application. If you have easy access to your payslips, bank statements and the other documentation the lender requires, the application process can be lodged by Mint Equity within 24 hours of receiving the documentation.

Many lenders have rapid refinance options, so if refinancing quickly is a requirement, we can arrange this option which enables your new lender to provide the new loan without waiting for your existing lender to process the discharge.