June 27, 2018
One of the obstacles of switching to a new loan is simply going through the process. It takes time for all the back and forth between your existing and new lender time that could be spent paying down your mortgage at your new, lower rate. To avoid a lot of the wait time, you can use a fast refinance. With a fast refi, you can enjoy an expedited process, as long as you qualify for this type of loan. In certain cases, such as if you are moving house or you need to release your equity for another reason, refinancing quickly isn’t just convenient, it’s key to having a smooth experience.
If you are concerned that the process could take several weeks, you’re not alone. Some lenders may, intentionally or not, delay the process. A great way to prevent this is with a fast refinance.
Here’s the thing it is not in your current bank’s best interest for you to refinance and become a customer with a new bank. Why would they rush a complex financial transaction that causes them to lose business?
When your bank takes a long time with your discharge agreement and if you have a complicated approval process that comes with even more documentation requests, you are looking at weeks before you get the new loan rate and features, and the closure that you want.
Instead of waiting, you can apply for a fast refinance loan with your new lender. This way you can take advantage of the financial benefits of your new home loan as soon as possible.
Normally, when you decide to refinance your home loan, the entire process can take anywhere from a month to three months, sometimes even longer.
You’d be surprised how many days can be added when something as common as a key individual being out of the office or tied up with other work for a few days gets in the way. The draw-out can get even worse if you have to submit documents multiple times. With a high volume bank, these occurrences are typical.
With a rapid refinance, instead of waiting for your old bank to provide the title for your property, your new lender will automatically deposit funds into your old loan account once you are approved and your offer has been signed and returned. Once the money is deposited, your old account automatically is closed. This means, a fast refinance can be completed within two to three weeks in some cases.
Another benefit of a fast refinance loan is that your new lender will take care of some of the paperwork for you, contacting your current lender and organising the new loan themselves.
Make sure you compare lenders before choosing which one to use for a rapid refi. There are some who will charge a fee for a faster approval process. This may be in addition to an application fee, as well as discharge and settlement fees. On the other hand, some banks will offer a fast refinance with no fees in order to attract new borrowers.
You’ll have to apply with lenders who offer this type of loan. Westpac, St. George and ANZ all have fast refinanced home loan products. When comparing lenders, look for loan products labelled as fast refi’, rapid refinance’, or other related terms.
You’ll also want to have a strong application generally, lenders will have their own rules on who can apply for a fast refinance loan. There shouldn’t be any restrictions on your property or existing debts linked to your loan account. You also may need to meet borrowing minimums.
With tighter restrictions today than a few years ago, you may want to check your financial health before applying for your fast refi. In order to meet stricter APRA rules and regulations, banks want to see higher loan serviceability than they did in the past.
For example, many banks have increased the interest rate they use to calculate loan serviceability, which refers to how much you can afford. They may expect you to be able to afford your new mortgage at an interest rate that’s 2.5% to 3% higher than the rate you are actually paying.
In the past, it was closer to 2% higher. If you’ve taken on more debt since you took out your mortgage credit cards, auto loans, education or business loans, for example it may be harder than you assume to qualify.
To ensure the process goes as smoothly as possible, make sure you have all your documents ready to go when you apply with your new bank. You’ll need recent bank statements, details on your current loan, as well as the standard loan application paperwork to verify your income, liabilities, and assets.
Make sure you explore the other loan features of your fast refi loan so you know you are getting the best loan for you. Do your part and have all your paperwork ready, then, research your options to find a lender with a fast refi loan product.
Not sure of your options? Don’t hesitate to reach out for help so you can get a rapid refinance loan that works for you.
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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