Increasing competition in the home loan market has brought positive changes for consumers, and home owners are now spoiled for choice when choosing a lender and a loan.

With so much choice and competition available, it’s important to know the facts so you can make an informed decision when deciding to switch lenders and refinance.

Why consider refinancing?

People refinance for various reasons. You may want to access your home equity for renovations or investment, or even to consolidate other debts. Alternatively, you might just be thinking about refinancing to take advantage of lower interest rates and fees, finding a new lender who offers a better service offering, or switching to a loan product with features that suit you.

When should you do it?

The right time to refinance should be based on your personal circumstances. Answer these simple questions to see if you’re ready to take the leap:

• Has your financial situation changed?
• Are you happy with your existing loan?
• Do you currently have a competitive interest rate?
• Are you happy with the service from your current lender?
• Do you have plans to borrow more money in the near future?
• Will your property value stack up, or has there been property value corrections in your area?
• Do you still have sufficient income to confirm serviceability?

Depending on your responses, it could be a great time to start looking at other options.

What’s involved?

It’s important to consider the time and cost involved with refinancing and weigh up whether you’ll be better off financially to stay with your current lender or seek a new one.

You’ll need to submit a new application and all supporting information to the new lender. This will mean gathering income proof such as payslips and rental statements as well as providing a complete statement of position which outlines your assets, liabilities and monthly commitments.

The new lender will run credit checks and assess your application before providing you with a loan offer. Once the loan is approved, you’ll need to complete a discharge request from your current lender so they can prepare documentation to release your mortgage. Once all loan documents are signed, your new lender will arrange a settlement time to repay your existing loan in exchange for the release documents. A new mortgage will then be registered by your new lender.

A new loan could mean you’re up for a range of fees and charges such as:

• Application or establishment fees
• Fixed rate penalties or early settlement fees to payout your existing loan
• Mortgage discharge fees from your current bank
• Valuation fees
• Legal or conveyancing costs
• Lender’s mortgage insurance if your loan amount is greater than 80% of your property value

Speak to us to get a clear picture of your current circumstances and whether refinancing could be the right move for you. Call Yotta, our Director, Lending Products, on +61 2 9278 9700 or send us an email.