Refinancing 101: The Steps to Follow for Beginners

Refinancing 101: The Steps to Follow for Beginners

If you’re dealing with a current mortgage and you aren’t satisfied with the policies you’re receiving anymore, you can consider refinancing and start looking for better offers. With a loan refinancing, your present bank or money lender will pay off your old mortgage using a new loan.

While some people think that refinancing is hard work, so long as you follow the right process, you can achieve a new loan with better interests in no time. But before you do, you must determine your reason behind refinancing. Whether you want better interest rates, want to buy an investment property, or you want to pay off your debts, you must know if your financial situation allows it as an option!

Reviewing repayments with your existing loan and the new one you’re planning to apply for and computing interest rates, monthly fees, and other financial costs can be done using a finance calculator. Keep reading below to find out the steps to refinancing your property.

Select the Correct Mortgage

Once you’ve determined that your situation calls for refinancing, picking the right mortgage is crucial, and it comes down to a comparison between home loans. Distinguish the features of your old loan from a new one, and if you’re receiving the same policies, if not better. 

But if you’re only aiming for lower interest rates, you should take the time to think about your decisions. For those who are unsure about what your loan should consist of, reaching out to a mortgage broker is necessary so that they can guide you according to your needs. 

Gather All the Necessary Documents

The process for refinancing is similar to when you first got your current loan. Before your new lender approves your loan, they want to make sure you’re capable of paying your dues and meeting your deadlines. Some information they’re expecting from you includes your proof of income, investment, assets, and living expenses.

Moneylenders want to make sure the person they’re dealing with is trustworthy. That’s why they will also want to know your credit history, as the higher the credit score you have, the higher the chances are that you can get approved for a new loan!

Submit Your Loan Application

When you’ve prepared all your financial documents and have made sure all your proof can justify your need for refinancing, you can start submitting your loan application. You can send over your documents either by yourself or through a mortgage broker.

From there, your potential lender will want to verify the total value of your property. Doing so will give them an idea of the loan they’re willing to approve for you. Once you’ve sent in your application, they will perform a formal valuation. 

Notify Your Current Lender

Telling your current lender about your plans to refinance is integral, especially if you want to avoid problems that could slow down the process of switching to a new lender. Your existing lender will also have to forward all the needed information to the next lender to help them oversee your mortgage better.

You can let your current lender know—or if you’re relying on a mortgage broker, they can handle the discussion on your behalf. What’s important is informing your current lender as early as possible, so everything is prepared before you verify and sign your new loan when you get approved.

Conclusion

The steps to refinancing are simple, and all you need to do is select the right mortgage, prepare your financial documents, submit your application, and tell your current lender of your plans. Once you get your new loan from a different lender, you can expect your next lender to manage your title deeds and act as the mortgagee of your property. They will ensure that you understand your new loan and guide you with settling your dues accordingly.  

Are you looking for a home loan in Perth for the property you’re investing in? FinanceCorp is a mortgage broker firm committed to finding the right home loan tailored to each of our clients. All of the Finance Managers at FinanceCorp are fully qualified, trained, and experienced mortgage professionals who live and breathe finance. Get in touch with us and enquire today!