Finance companies have more competition than ever before. The big banks are competing with smaller banks, as well as online lenders, and non-bank lenders, too.
This competition in Australia’s finance industry has allowed borrowers, just like you, to be more flexible with who you choose to borrow from, as well as how long you choose to stay with the same bank.
Research by finder.com.au indicates the total value of refinanced homes in Australia will surpass $100 billion by 2017.
So why do so many Australians refinance?
Refinancing is the process of finding a more suitable home loan product to help you achieve a particular goal. For example, you may want to refinance to:
- Reduce your current interest rate and save on repayments
- Switch banks to access better loan features
- Consolidate your smaller personal loan or credit card debts into your mortgage
- Cash out your home equity for a purchase like a car or a holiday
- Invest in property using your home equity
- Use your equity to renovate your home
As you can see, refinancing a mortgage can allow you to save more or achieve more. When refinancing, standard lending criteria still apply. This means a bank or a broker will still consider the following for your refinance application:
- Credit information
- Proof of ongoing income
- Personal details
Because you already have a mortgage, however, the process of refinancing may be quicker than a standard home loan application.
How often can you refinance?
Usually, you cannot refinance less than 6 months after signing up to a home loan. You can only refinance to achieve a specific goal and the bank or broker you work with will ask you what that goal is.
How do you refinance?
You can talk to your current bank or lender to see if you are in a position to refinance. However, you may be missing out on a better rate if you don’t seek various options. Using a mortgage broker may give you more choice. A mortgage broker can negotiate with a number of banks on your behalf to find you a range of options from different lenders.