June 20, 2017
If you want to take advantage of the low rates offered by banks, you may want to refinance sooner rather than later. New research indicates it could take well over a month, if not two or more, to get your new loan. Online mortgage marketing place, HashChing, investigated the wait time among its 1,021 customers for a home loan refinance application to settle once it is submitted. They found the average wait time to be 17 days. Add this to the time you take to gather and submit all the necessary documentation and to fill out all the proper forms, and it may be several weeks before you actually get your new loan to take effect.
This is why it is so important to start the process right away – as long as you are sure refinancing is the right option for you.
Australian borrowers are under even more pressure than usual to make a quick decision because of the upcoming bank levy. The federal budget for 2017-18 includes a new tax, which will specifically target the major banks.
Westpac, one of the big four banks, has already come out to say they will be unable to absorb the costs of the proposed 1 July bank levy and will likely pass on the costs to customers, shareholders, staff, and suppliers.
Lindsay Maxsted, Westpac’s chairman, wrote in a letter to shareholders, No company can simply ‘absorb’ a new tax.
If Westpac and the other major banks decide to pass on the cost of the tax to customers, you may see interest rates rise. Often, when the major banks raise rates, other lenders eventually follow suit.
Refinancing now may be a way to beat the changes, if you’re ready for a new loan.
On the other hand, you don’t want to rush into a new loan agreement if you weren’t ready to refinance in the first place. Refinancing will cost you thousands when you add up all the refinancing fees, taxes, and other costs. It pays to do the maths when determining how much it will cost you to refinance with a specific lender. Then, calculate how many months it will take you to recoup these costs from what you save each month with your new home loan repayments.
As a general rule, the longer you plan on holding onto your property, the more likely refinancing is a worthwhile decision. Weigh your options, research the loan products and possible refinancing offers lenders have available, and keep an eye on the economic changes that impact the real estate market. This way you’ll be able to make a better informed decision to suit your situation.
If you’re sure you want to refinance, you may find that waiting is a mistake. Keep in mind that the whole process, from you gathering paperwork to your current lender giving you a discharge agreement, won’t happen overnight. If you want your new loan soon, you’ll have to act quickly to initiate the process.
Written by Refinancing.com.au
Refinancing.com.au is an end-to-end service that helps people refinance their home loan. We empower you to search for your home loan, and choose the process that suits you.
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