5 tips to help you refinance your home loan
The RBA has held interest rates again in its March 2022 update, so if you have been thinking about refinancing your home loan you still have time before interest rates might leap upwards. If refinancing your home loan seems a little daunting, take a peek at these 5 tips before you get started.
1. Check your credit score and credit report
The first thing to do before refinancing your home loan is to check your credit score. A low credit score could mean a potential lender may not approve your application to refinance. Your credit score is an indication of your credit worthiness and calculated from the information in your credit report. It’s worth reviewing your credit score and credit report to make sure they are accurate and up to date. Correct any errors and identify any areas for improvement to give yourself the best chance at refinance approval.
Savvy tip: With Credit Savvy score factors, you can see the things that are helping your credit score and understand opportunities for improvement. Check out your score factors now.
2. Make repayments on time
When you check your credit report, pay particular attention to your repayment history on all of your credit products. If you’re refinancing your home loan, a potential lender will want to know that you have a history of making your repayments on time, every time. While missing repayments in the past is not a total deal breaker, get yourself back on track as soon as possible and stick to your repayment schedule.
If you deferred payments or made arrangements with credit providers due to COVID-19, you should check that the provider has provided accurate information to the credit reporting bodies.
3. Do your research
Compare your current home loan with the latest offers in the market. Knowing what other lenders are offering will be particularly helpful in the negotiation process of your next application. You can also make use of Credit Savvy’s home loan calculators to help you calculate the repayments and potential savings.
4. Get all of your ducks in a row
Life admin alert! Before you start your application, get yourself application ready. Find the important documents you will need such as payslips, bank statements and loan documents beforehand so that one missing document doesn’t slow down your application. Remember, lenders look for stability when they assess your application. If you’ve recently changed jobs, gone on maternity leave, or had any major changes to your financial situation, you may want to hold off refinancing.
Consider the impact that COVID-19 had on your finances. This is particularly relevant for those who are self-employed or who were furloughed due to COVID-19. Some lenders may consider pre-COVID-19 income, provided that your income has returned to this level, whilst others may strictly look at your income for the past two years.
5. Talk to your current lender
If you’ve found yourself a better deal, ask your current lender if they can match it. You may be surprised by what your lender is willing to offer you to keep your business, so you may be able to score yourself a better offer without having to go through the whole application process with another lender.
Want to learn more about refinancing? Head over to the Learning Hub for more tips and tricks.