Many perks come with refinancing your home loan. It can help you lock in lower interest rates, get more flexible loan features, or get you a better loan structure that works well with your financial standing. But before going into it, there are a couple of things that you need to prepare to make your refinancing worthwhile:
5 Steps to Preparing Your Mortgage Refinancing
1. Make Sure You Want to Push Through
Before getting into the how’s of it all, you first need to look at the reasons you want to get into it in the first place. Some good financial reasons to push through with it are to secure lower interest rates, add valuable features, or change the terms of your loan. If you aren’t on a fixed interest rate, it may be something you want to switch to. The same goes for wanting a variable rate instead.
Refinancing your mortgage can’t guarantee a fix for all your financial trouble if you are in any. Moving things around to see where you can cut corners to pay unsecured debt isn’t an ideal reason to refinance your mortgage. There are undoubtedly other solutions you can try for that.
2. Be Ready for the Costs
Refinancing your mortgage isn’t a service that will come free. There are fees to cover just to get out of your old home loan, such as discharge fees, break costs (if you were on a fixed interest rate term), and exit fees if you took out your loan before 1 July 2011.
To get a new home loan, you will need to cover application fees, property valuation fees, settlement fees, and mortgage registration fees charged by the state government.
3. Assess Your Current Financial Situation
Lenders will assess your current financial situation to process your application. They will look at your credit score, spending habits, and savings. If you know that you can’t pass this assessment with your current financial standing, you may not be ready to refinance your loan.
4. Get Ready for a Mountain of Paperwork
Just like applying for your first mortgage, there are stacks of documents you have to go through. The two main things you need to prepare are proof of income and validation of your current financial position. This includes your recent payslips, the last two years of your tax returns, rental statements, account statements, credit card statements, and more. For construction loans, you may need to present the build plans.
Once you’ve got everything locked and loaded, you can apply for your new home loan. This process is similar to the original process you went through initially when you got your first home loan, with some added steps. A good mortgage broker will help you through the process as long as you choose the right people with the best customer service.
Are you considering mortgage refinancing in Perth? Work with FinanceCorp, a mortgage broker company that makes finance easier for every client. All the Finance Managers at FinanceCorp are qualified, trained, and experienced mortgage professionals who live and breathe finance. Contact us today to get started!