What is the refinancing Fast Track process?

What is the refinancing Fast Track process?

In your refinancing research you may have come across something known as the Fast Track refinancing process or FastRefi. This refers to a specific type of refinancing, offered by some lenders, that allows the borrower to get their new loan settled in approximately three days if no physical property valuation is required.

Compared to the standard refinancing time of 21-30 days this is significantly shorter.

But what is it that makes this process so fast? And is it always a good option for all borrowers?

This article will answer commonly asked questions about the Fast Track refinancing process and what it means for you as a borrower.

What makes the Fast Track process so fast?

Two businesspeople with coffee laptop and folder

The Fast Track refinancing process is able to be relatively short because a prospective lender agrees to take on your existing debt before the title of the property is transferred to them. This cuts out the time consuming back-and-forth between your old and new lender which would usually occur before settlement.

During the standard refinancing process, your new lender will wait for your old lender to transfer them the title to your property before taking on your debt. This way, your new lender has a legal right to sell your home if you cannot repay your debt. In the Fast Track process, your new lender trusts that you will not default on the loan before they have the legal means to recoup their loss.

Of course, as they are taking on a risk in this process, your new lender will ask you to pay some form of title insurance that will cover their loss if you were to default on the loan before they get their hands on the property title. Some lenders may cover this insurance fee as an incentive to convince you to switch lenders.  

Why would I prefer this to the normal process?

Borrowers who are switching to a lower interest rate will find the Fast Track option particularly attractive as it will allow them to start paying less for their loan as soon as possible. This will shorten the time it takes for them to break even on the refinancing costs and start stashing away the savings that come with a lower monthly repayment.

The faster the switch is completed; the sooner the savings will start appearing in your own pocket rather than that of your old lender.

It also means that the process will not drag on for a period of weeks or months, giving a borrower peace of mind that the switch is completed and doesn’t require following up.   

Pros
  • Process is completed faster
  • Potential savings begin sooner
Cons
  • May have to pay title insurance
  • Less time to change your mind

 

Will the Fast Track refinancing process cost extra?

The only reason that the Fast Track refinancing process may cost you extra is if you have to pay for the title insurance fee to cover the lender. If you will have to pay this charge, it is worth recalculating your break even point to see if getting the discounted interest rate early will pay off the extra fees you will be charged.

Who offers Fast Track refinancing?

Some lenders are known to offer the Fast Track refinancing process such as IMB and loans.com.au. If you are interested in a loan from another provider, you should contact this lender and ask if they offer the Fast Track refinancing process.

Your personal circumstances will also affect your eligibility for this process so make sure in this initial contact you are prepared to discuss your current financial situation.

Lenders that offer Fast Track refinancing

 

 

 

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Learn more about home loans

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.

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.

 

 

Monthly Repayment

Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.

Savings over

Select a number of years to see how much money you can save with different home loans over time.

e.g. To see how much you could save in two years by switching mortgages,  set the slider to 2.

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).

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.

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.

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 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. 

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.

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

When should I switch home loans?

The answer to this question is dependent on your personal circumstances – there is no best time for refinancing that will apply to everyone.

If you want a lower interest rate but are happy with the other aspects of your loan it may be worth calling your lender to see if you can negotiate a better deal. If you have some equity up your sleeve – at least 20 per cent – and have done your homework to see what other lenders are offering new customers, pick up the phone to your bank and negotiate. If they aren’t prepared to offer you lower rate or fees, then you’ve already done the research, so consider switching.

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.

What is the amortisation period?

Popularly known as the loan term, the amortisation period is the time over which the borrower must pay back both the loan’s principal and interest. It is usually determined during the application approval process.