How long does it take to refinance?

How long does it take to refinance?

While most people understand the benefits that refinancing can bring, they also know that the process will take time and effort on their part. But exactly how much time does it take to refinance?

If you’ve never gone through the process before, you may be curious as to how long the different steps take.  

Firstly, it is important to note that there are two stages to the refinancing process; before you refinance and the actual refinancing.

Before you refinance you need to have a clear idea of what your aim is. This will be what guides you through your decision making. It could be to lower your monthly repayment amount, consolidate debt or many other reasons. Establishing this aim is your first step.

After this, make sure you locate all the necessary info about your current loan and any relevant paperwork. Once you have gathered all the information you need you can start comparing alternative loans and pick out an option that suits your aim. With a specific product in mind you can then begin to calculate switch costs and determine the break even point of your loan switch.

Following this initial process is complete, and you have a loan in mind that you want to switch to, you will begin the second phase of the refinancing process. Below is a step by step guide to this process as well as an infographic that will visually guide you through the journey.

The total amount of time it takes to refinance once you begin the process can range from three days, for the Fast Track process, to up to four weeks for the standard process. The three day Fast Track refinancing process, or FastRefi as it is sometimes known, is not offered by all lenders and you can discuss the estimated length of refinancing with a lender in your initial contact with them.

What is the Fast Track refinancing process?

The Fast Track refinancing process is a way of having your loan switched to a new lender in a total of three days. It is offered by lenders as a way of reducing the time between you making the decision to refinance and them closing the deal. The benefit for your new lender is that this gives your old lender less time to offer you incentives to stay. The benefit for you as a customer is that you can have the process completed in a matter of days rather than worrying about it for an extended period of time. 

The main way that the time taken to refinance is reduced in the Fast Track process is by your new lender paying your old lender the outstanding amount of debt before they are given the title to your home. While this cuts out a lot of back and forth communication between lenders, it also means your new lender takes on added risk by being out of pocket before the receive the security for the loan.

To compensate for this risk, the new lender may ask you to pay something called title insurance. This is designed to cover them if there is a hiccup in transferring the title of the home from the old lender after the loan has been settled. Your new lender may offer to cover this expense in some circumstances.  

Lenders that offer Fast Track refinancing 

 

 

What is the standard refinancing process? 

The standard refinancing process is when you complete the initial steps to apply for a new loan and then have to wait for your new lender to contact your current lender and arrange the terms of transferring the debt. This can take weeks during which time you will have to wait until your new loan is approved. As a result, the whole process usually takes between 2-4 weeks.

In the standard process, the lender’s will organise the transfer of debt and property title before the loan is settled, meaning you will not have to pay any form of title insurance. 

Low rate refinancing loans

 

Below are the steps that apply to both the Fast Track and standard refinancing process. 

Suitability talk

This initial step towards refinancing involves you reaching out to your chosen lender to have a chat about your potential suitability for the loan you are interested in. This will generally be conducted over the phone and take about 20-30 minutes. The lender will want to determine whether your employment status and financial situation will meet the serviceability criteria of the loan for which you wish to apply.

This chat is important because the lender should be able to give you a basic idea of whether or not your loan application will be rejected based on the initial information you provide. This can prevent you applying for a loan that is greatly unsuitable and help you avoid a black mark on your credit report from a knocked back application.

Sending identity and finance documentation

 After this initial chat, the lender will guide you in the next step of sending them documents to confirm your identity and what you have verbally told them about your financial status. What the lender needs will vary so ask them for a specific list to make sure you cover everything they need the first time around. They may be OK with documents being sent online or may prefer to receive them by mail. Again, make sure this is outlined in your initial contact to avoid confusion.

You should be able to get these documents sent off on the day after your first contact with the lender. Having these documents prepared before you get to this part of the process will help it go a lot smoother.

Valuation

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Once the lender has received your paper work, and decides to progress the application, they will organise a valuation of your property. Your property will need to be valued so the lender can determine the loan to value ratio which generally needs to be 80 per cent or less. This can be done remotely or physically and depending on which option the lender opts for the process can take differing amounts of time. This is likely to take place on the third day of your loan application, depending on the lender.  

Loan approval

If everything goes smoothly up until this point you will then have the lender approve the loan. The fast tracked version of refinancing will see you progress to this point within 72 hours. The standard process could take up to 2 weeks.

Settlement

After the loan is approved, your new lender will contact your old lender to have the property title and debt transferred. This is the settlement process which can take a couple of weeks to be completed and there may be fees involved.

Set up and discharge fees

Post settlement you will need to make sure you have paid any outstanding set up and discharge fees. Discharge fee range between $100-400 and setup fee are between $300-1,000. Some lenders will cover these fees, however, to make the switching process more attractive. 

The fees associated with switching loans will be covered by your new lender and rolled into the total amount that you owe them. if these fees are left to be paid over the full loan term they will cost you significantly more in interest charges. For this reason, making an extra repayment to cover any fees charged in the early days of your loan is advisable.  

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If I don't like my new lender after I refinance, can I go back to my previous lender?

If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

Therefore, before you refinance, it’s important to weigh up the new prospective lender against your current lender in a number of areas, including fees, flexibility, customer service and interest rate.

Why should I get an ING home loan pre-approval?

When you apply for an ING home loan pre-approval, you might be required to provide proof of employment and income, savings, as well as details on any on-going debts. The lender could also make a credit enquiry against your name. If you’re pre-approved, you will know how much money ING is willing to lend you. 

Please note, however, that a pre-approval is nothing more than an idea of your ability to borrow funds and is not the final approval. You should receive the home loan approval  only after finalising the property and submitting a formal loan application to the lender, ING. Additionally, a pre-approval does not stay valid indefinitely, since your financial circumstances and the home loan market could change overnight.

 

 

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

Can I apply for an ANZ non-resident home loan? 

You may be eligible to apply for an ANZ non-resident home loan only if you meet the following two conditions:

  1. You hold a Temporary Skill Shortage (TSS) visa or its predecessor, the Temporary Skilled Work (subclass 457) visa.
  2. Your job is included in the Australian government’s Medium and Long Term Strategic Skills List. 

However, non-resident home loan applications may need Foreign Investment Review Board (FIRB) approval in addition to meeting ANZ’s Mortgage Credit Requirements. Also, they may not be eligible for loans that require paying for Lender’s Mortgage Insurance (LMI). As a result, you may not be able to borrow more than 80 per cent of your home’s value. However, you can apply as a co-borrower with your spouse if they are a citizen of either Australia or New Zealand, or are a permanent resident.

How long does Bankwest take to approve home loans?

Full approval for a home loan usually involves a property valuation, which, Bankwest suggests, can take “a week or two”. As a result, getting your home loan approved may take longer. However, you may get full approval within this time if you applied for and received conditional approval, sometimes called a pre-approval, from Bankwest before finalising the home you want to buy.  

Another way of speeding up approvals can be by completing, signing, and submitting your home loan application digitally. Essentially, you give the bank or your mortgage broker a copy of your home’s sale contract and then complete the rest of the steps online. Bankwest has claimed this cuts the approval time to less than four days, although this may only happen if your income and credit history can be verified easily, or if your home’s valuation doesn’t take time.

Can I get a NAB home loan on casual employment?

While many lenders consider casual employees as high-risk borrowers because of their fluctuating incomes, there are a few specialist lenders, such as NAB, which may provide home loans to individuals employed on a casual basis. A NAB home loan for casual employment is essentially a low doc home loan specifically designed to help casually employed individuals who may be unable to provide standard financial documents. However, since such loans are deemed high risk compared to regular home loans, you could be charged higher rates and receive lower maximum LVRs (Loan to Value Ratio, which is the loan amount you can borrow against the value of the property).

While applying for a home loan as a casual employee, you will likely be asked to demonstrate that you've been working steadily and might need to provide group certificates for the last two years. It is at the lender’s discretion to pick either of the two group certificates and consider that to be your income. If you’ve not had the same job for several years, providing proof of income could be a bit of a challenge for you. In this scenario, some lenders may rely on your year to date (YTD) income, and instead calculate your yearly income from that.

Can I refinance if I have other products bundled with my home loan?

If your home loan was part of a package deal that included access to credit cards, transaction accounts or term deposits from the same lender, switching all of these over to a new lender can seem daunting. However, some lenders offer to manage part of this process for you as an incentive to refinance with them – contact your lender to learn more about what they offer.

How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

How do I refinance my home loan?

Refinancing your home loan can involve a bit of paperwork but if you are moving on to a lower rate, it can save you thousands of dollars in the long-run. The first step is finding another loan on the market that you think will save you money over time or offer features that your current loan does not have. Once you have selected a couple of loans you are interested in, compare them with your current loan to see if you will save money in the long term on interest rates and fees. Remember to factor in any break fees and set up fees when assessing the cost of switching.

Once you have decided on a new loan it is simply a matter of contacting your existing and future lender to get the new loan set up. Beware that some lenders will revert your loan back to a 25 or 30 year term when you refinance which may mean initial lower repayments but may cost you more in the long run.

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.

Can I take a personal loan after a home loan?

Are you struggling to pay the deposit for your dream home? A personal loan can help you pay the deposit. The question that may arise in your mind is can I take a home loan after a personal loan, or can you take a personal loan at the same time as a home loan, as it is. The answer is that, yes, provided you can meet the general eligibility criteria for both a personal loan and a home loan, your application should be approved. Those eligibility criteria may include:

  • Higher-income to show repayment capability for both the loans
  • Clear credit history with no delays in bill payments or defaults on debts
  • Zero or minimal current outstanding debt
  • Some amount of savings
  • Proven rent history will be positively perceived by the lenders

A personal loan after or during a home loan may impact serviceability, however, as the numbers can seriously add up. Every loan you avail of increases your monthly installments and the amount you use to repay the personal loan will be considered to lower the money available for the repayment of your home loan.

As to whether you can get a personal loan after your home loan, the answer is a very likely "yes", though it does come with a caveat: as long as you can show sufficient income to repay both the loans on time, you should be able to get that personal loan approved. A personal loan can also help to improve your credit score showing financial discipline and responsibility, which may benefit you with more favorable terms for your home loan.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

How do I know if I have to pay LMI?

Each lender has its own policies, but as a general rule you will have to pay lender’s mortgage insurance (LMI) if your loan-to-value ratio (LVR) exceeds 80 per cent. This applies whether you’re taking out a new home loan or you’re refinancing.

If you’re looking to buy a property, you can use this LMI calculator to work out how much you’re likely to be charged in LMI.

How long does NAB home loan approval take?

The time required to get your home loan from NAB approved can vary based on a number of factors involved in the application process. 

Once you have applied for a home loan, a NAB specialist will contact you within 24 hours over the phone to take down relevant information, including your total income, debts (existing loans, credit cards, etc.), assets (car, shares, etc.), and your monthly expenses (food, utility bills, etc.). Your lender might also ask for information related to the property you want to purchase, including the type of dwelling and preferred postcode.

NAB will then verify all your information and check your credit score, and if the details stack up, you should be given a conditional approval certificate. This certificate stipulates how much money NAB is willing to lend you and is typically valid for 90 days. 

Once you have your conditional approval, you can start browsing for properties that you like and that fit within the budget that NAB has provided. After you find a suitable property, you’ll need to give a copy of the signed deed to NAB, following which you should get full approval and access to the funds. This process can take up to 4-6 weeks.