Refinancing your Inner West home loan

With interest rates on the rise, refinancing your Inner West home loan has never been a hotter topic. Today we’re discussing the pros and cons of refinancing and the steps you can take to refinance your home loan.

Why should you refinance your home loan?

Refinancing is when you either take out a new loan with a different lender to pay off your existing loan or change to a new loan with your existing lender.

The biggest pros of refinancing include lower interest rates, lower ongoing fees and reduced repayments. There’s also the fact that refinancing allows you to gain access to equity or a loan increase for renovations, as well as cashback offers or other incentives.

The main con of refinancing is the fees involved, including the costs of closing and reopening a new loan. Other applicable fees might be mortgage discharge fees, application fees, valuation fees and annual fees. Ensure you look at the big picture before you take the next steps and get advice from a mortgage broker or your financial adviser.

Steps to take to refinance your home loan

When you understand why you’re refinancing and know the costs involved, here are the next steps:

1. Compare home loans

We must stress that while it’s fine to do your desk research, you’ll end up with a better deal if you talk to a specialist.

Once you’ve crunched the numbers, it’s time to do some loan research.

First, begin with your current lender to learn whether there’s a different loan that better suits your needs. A better deal saves you the hassle and costs associated with switching lenders. And remember that many lenders are offering good deals to new borrowers while you might be stuck on higher rates with fewer loan benefits.

When comparing home loans, look beyond the interest rate and analyse the fees, the flexibility surrounding additional payments and any unique features. Consider shopping around with multiple lenders through a broker to get the best deal possible.

2. Apply for your new home loan

You’ve done your homework, spoken to a home loan specialist and picked the right lender and home loan for you. Now it’s time to apply. While every lender has a different application process, most accept online applications. You’ll need several documents in order to apply, including:

• Personal ID like your passport, driver’s licence or birth certificate.
• A copy of your current rates notice with payment verification.
• The last six months of current home loan statements, which show the total amount owing.
• The last three months of unsecured debt statements, such as credit cards, personal loans or car loans.
• Proof of income, including payslips or tax returns.
• The last three months of bank statements.
• Evidence of rental income, if applicable.

Once you’ve applied, approval can take from one to eight days.

Our top tip: It’s worth preparing documents well in advance. The more information you can supply to a lender, the better chance you have of securing a new loan. For example, your lender can get a much better idea of your spending habits with a year’s worth of bank and credit card statements.

3. Prepare for a property valuation

When refinancing, you’ll find that most lenders require a property valuation, even if one was completed when you applied for your current home loan. Its aim is to determine whether your property has increased or decreased in value, which can affect the amount of equity you have.

4. Say hello to your new loan

After the property valuation and inspection of documents, the next step is a credit assessment. If all is well, you’ll get the seal of approval. The lender will forward a mortgage contract package that typically includes the contract, terms and conditions, a direct debit form, the mortgage of land form and the discharge form.

If you’re not using the same lender, your new lender will work directly with your old lender to discharge your mortgage. It’s their responsibility to take care of the necessary paperwork including the title transfer.

Afterwards, you’ll reach the settlement stage and they’ll disperse the required funds to pay out your old loan. If everything goes to plan, from approval to settlement should take approximately two weeks.

Can we help with your Inner West home?

Whether you’re ready to sell or need help to rent your investment property, we have the experience and local knowledge to make your property journey easier.

Looking for help selling your home or renting your investment property? Our team at Belle Property Balmain supports homeowners across Balmain, Balmain East, Birchgrove, Rozelle and Lilyfield. Feel free to get in touch for a no-obligation discussion or property appraisal.