How long is the refinancing process?
18th June 2020 - Freya Cormack
Since the length of the refinancing process differs for every homeowner, it’s important to give yourself plenty of time. Refinance at a time that is convenient for you and where you won’t be too busy in your personal and professional life.
For some, refinancing can be a swift process that happens in a week or two. But for many, it will take much longer. While there are some preliminary steps you can take to speed up the process, delays can happen and are out of your control.
Since each application and bank are unique, it can be difficult to predict processing times. For example, some banks may analyse your spending more closely than another one would. And even if your application is perfect, a lender can still change their requirements when it suits them. For example, even though a lender initially asks for just 3 months of bank statements, they may ask for more later, delaying your application.
Speak to a mortgage broker if a fast settlement is a priority for you. They may have a better insight into which lenders process home loans quickly.
Keep reading for some tips on how you can apply and get approved for your next mortgage as quickly as possible.
1. Prepare all necessary documents
Refinancing contains many of the same steps required as when you applied for your original home loan. Lenders will ask for paperwork that shows your spending habits, income, assets and liabilities. Some of the documentation you may need to provide includes:
- Mortgage repayment statements for the past 3 months
- Recent council rates notices
- Any council approved plans for renovations (if applicable)
- Building Insurance Policy documents
Banks may ask for further information, but they are able to access information on your credit score without your cooperation. They should clearly outline what documents they need you to provide, but a mortgage broker can help with this and guide you through the process.
To avoid delays, make sure that you get your paperwork right the first time.
2. Choose a bank that processes refinancing applications quickly
As mentioned above, there are some lenders that have reputations of being fast or slow in their operations. A mortgage broker can provide expert advice and will have a professional insight into which lenders to go with for a fast refinance.
In saying this, don’t rely on reputations and rumours. Delays are sometimes inevitable and it’s best to avoid a rushed refinance on your home loan.
3. Assess your income and credit score
In addition to giving you more bargaining power with a lender, having a good credit score could speed up your application. Lenders may spend less time nitpicking your spending habits and bank statements if your credit rating signals you as a low risk borrower.
Not everyone will have a detailed or extensive credit history, so lenders will also look at your income. A high, stable income that is relative to your desired loan amount is viewed most favourably. Don’t forget to make regular contributions to your savings!
4. Get pre-approved
If your reason for refinancing is to move to a new house, it’s smart to get pre-approval. Since your new property may cost more, you might need a different (larger) loan. Pre-approval is an indication that a bank will most likely approve you for your new mortgage.
Pre-approval offers are usually valid for 3-6 months, so it can be something done well in advance. This means that when it comes to formally selling your current home and buying the new property, your new loan will be approved more quickly.
Property vendors may view pre-approved buyers more favourably as settlement can potentially be reached earlier. You’ll also have a clear idea of how much you can afford to pay for your new property.
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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.
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*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
^The estimated average future interest savings is calculated as at 15 April 2020 based on Lendi assisting customers into new loans with an average interest rate reduction of 0.89% for the 11 months prior, and assuming a median loan term of 26 years on both the old and new loan and all monthly principal and interest repayments will be made on time. Any future savings figures are estimated averages only, and do not take into account any product features or fees (including refinancing or break costs). Your savings will be different.