Today’s mortgage market is very competitive, so if you’ve put your mortgage on ‘auto-pilot’ you could be paying more interest than you should be.
If you’re looking to save money and pay off your home loan sooner then it makes good financial sense to review your home loan to see whether refinancing could be right for you. Stephane Feuillye, MOVE Bank’s Senior Relationship Executive, has helped hundreds of homeowners refinance during his career.
Here are his five key steps to refinancing:
1. Advertised interest rate vs comparison rate
When it comes to refinancing it’s important to weigh up your potential savings you could make by switching loans, against the costs. So when you’re considering a new loan make sure you look at the comparison rate – rather than the variable rate.
If you compare loans based on the variable interest rate, you’re not taking into account the fees and charges the loan may carry. Instead, look at the comparison rate as a tool to help you identify the true cost of the loan.
For example, A member showed Stephane a competitor’s offer which seemed like a great deal. However, after carefully reviewing, there were a lot of additional ongoing fees and was going to cost the member a lot more in the long run. Compared to our offer which although had a slightly higher interest rate there were no ongoing costs at all.
2. Find a suitable loan
Interest rates are not the only consideration when you are looking at refinancing. Each loan offers a combination of different features, so you need to make sure the one you choose has the features that are important to you. Some questions to ask when evaluating a loan include:
- Can you make extra repayments?
- Does the loan offer an offset facility?
- Are you allowed to make unlimited redraws – and will you be charged for them?
- What are the ongoing fees or break fees?
It is an Australian Government requirement for financial institutions to have a Home Loan Key Fact Sheet available for every mortgage product; this is available on the lender’s website.
This is a true ‘non-bias’ look at the facts of the loan product and can make comparing products easier.
3. Assessing your refinancing and costs
While refinancing is a straightforward process, there are some costs you’ll need to consider:
- Break fees: Consider these fees and weigh them against the savings of refinancing.
- Valuation fees: In Australia valuation fees can cost $300-600 depending on where you live.
- Establishment & ongoing fees: Confirm any establishment and ongoing fees to your loan.
Generally, the interest rate savings will outweigh the costs of refinancing the loan.
Meet Tom, he was looking to refinance his two loans, totalling $494,000 from a major bank. Unsatisfied with the service, he was seeking better treatment and to pay off his loans quicker. After finding him a suitable loan to achieve his goals, Stephane worked out the savings.
Over the life of the loan, Tom saved a total of $128,690 or $216.50 per fortnight, giving Tom the ability to pay off his loan 6 years and 3 months earlier!
4. The application process
Applying to refinance your home loan can be a daunting process, but a good lending specialist will be able to guide you through the process as painlessly as possible.
One of the ways you can help the application process run smoothly is to have all your supporting documentation ready when you apply. Documents you may need to supply include:
- Proof of income such as tax returns, pay slips and dividend statements
- Documentation on your existing credit facilities and expenses
- Rates notice
Depending on the complexity of your application, more documents may be required.
5. Settling your new mortgage
Once approved for finance, MOVE Bank will give you contracts to complete and return. They will then contact your current lender to organise the refinance.
When your current lender has received the payment on their loan, MOVE Bank will take possession of your Certificate of Title and the refinancing process is complete.
Testimonial from Joanne
I would like to be able to pass on my thanks to you and to ensure that your direct report Manager, knows how professional, and helpful the service you have provided to us in the process of shifting our mortgage over to MOVE bank. We certainly did not take our decision lightly as we are not people that change our finances often.
From the moment we received the initial call from you the service has been outstanding with regular updates and your patient guidance throughout the process. I am a stressful person which is a hazard of my role, and you have never made me feel stupid or a bother and I am so grateful for that and the loan that we now have. I would recommend your services to anyone and happy to do so.
Thank you, Stephane for all you have done for us over the last 6 weeks and we both wish you every success in your career.
Whether you’re looking for flexibility, a lower interest rate or to consolidate your debts, refinancing could help you achieve your goal. As everyone has different needs and objectives, be sure to consult with a financial advisor who can give you advice on your particular situation.
Ready to Refinance? Switch to MOVE Bank today!
Call Stephane on 0436 651 372 or email
This blog post is for general information purposes only and is not intended as financial or professional advice. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product or other professional advice. You should seek your own independent financial, legal and taxation advice before making any decision about any action in relation to the material in this article. Railways Credit Union Limited trading as MOVE Bank ABN 91 087 651 090. AFSL/ Australian Credit License number 234 536 | ABN 91 087 651