June 9, 2017
Wouldn’t it be great if you could refinance your home loan without having to go through the process of finding a new lender, getting discharge approval, and paying all those fees that accompany switching from one bank to the next? You can! In fact, refinancing with your current lender can be an excellent way to save on refinancing costs and to shorten the overall process.
By keeping your home loan with your current lender and merely switching products or asking for a lower rate, you can enjoy important advantages.
- If you are refinancing solely to enjoy a lower interest rate and lower your mortgage repayments, staying with your current lender makes it possible to enact a quick, simple rate change. Your lender can apply a discount rate. That’s it; no drawn out refinancing process necessary.
- Even if you are interested in a different home loan product, for example if you want to refinance to a fixed rate mortgage or a line of credit home loan, you can save on discharge and settlement fees by staying with your bank.
- By staying, you have a certain degree of negotiation room. Your current lender will want to keep you as a customer. You may be able to get a better deal by staying depending on what they are willing to offer to keep you on board.
When you approach your bank, you are essentially walking into a negotiation rather than seeking approval. With this in mind, what are the steps you can take to put yourself in a stronger position to negotiate for what you want?
First, it is important to know exactly what it is you want out of your new loan. If you only want a low interest rate and have no interest in extra features, which often come with higher rates, that’s what you should be pushing for. On the other hand, if the idea of having extra cash to cover the costs of a home renovation in a year or two interests you, make sure you request the right features, such as a redraw option with no fees.
Second, be realistic about your borrowing eligibility. If you’ve been repaying your mortgage on time and keeping your other debts under control, you’re more likely to get what you ask for than if your credit score has gone down or your income-to-liabilities ratio has changed. If you have the ability to improve your borrowing qualifications, such as being able to pay off credit card debt sooner rather than later, then it may benefit you to wait a few months before requesting your new loan.
And finally, learn what other offers are available. Research different rates, loan features, and fee schedules. Knowing how competitive the rates are with other lenders and what refinancing rebates are available elsewhere, you can ask your bank to, at least, match the best offer you’ve found. This can also help you in case you do decide to switch. You’ll already have determined what your next best alternative is, and can simply go to apply with that lender if negotiations fall through with your current provider.
The more you know, the better equipped you are to get an excellent refinanced home loan or even just a simple rate discount, without all the hassle and expense of having to move to another bank.
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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