Do I refinance with my current lender or apply for a new home loan?
So, you’ve decided you want to refinance your home loan so you can do that renovation / have that holiday / get a better deal / build a property empire! But… should you go with your existing lender or start afresh?
There are some key factors to think about before you get ahead of yourself. Let’s take a look below:
What have I got now?
Research conducted by UBank found that a staggering 85% of Australians don’t know their home loan rate1! If you don’t know the details of your current mortgage, it will be hard to know what to consider next.
Make sure you can answer these questions:
- What’s my interest rate?
- Is my interest rate variable or fixed?
- What fees do I pay?
- What loan features do I have (Offset account, redraw facility, packaged discounts and credit cards etc.)
- What’s the balance remaining?
- How many years do I have left?
You’ll also need to have an idea of the value of your home. There are some online tools you can use or you can ask a local real estate agent. Though as part of any application, your current or prospective lender will likely arrange for a formal valuation.
Compare and seek guidance
Once you know what you’ve got, you can start comparing to see what else is out there. Comparison sites can be a good place to start your research. Remember to make sure you are comparing like-for-like rather than focusing only on the headline interest rate. If research really isn’t your bag then you can look to a mortgage broker for help.
Speak to your current lender
This is the time to make your lender work harder for you! You know what you’ve got, and you know what else is out there. Explain to them what you are looking to do and what options they have for you to help you achieve it.
If you are looking to save money, then start with one question: “Am I currently getting the best deal I can from you?”
Other things to consider
Whether you decide to refinance your home loan with your existing lender or apply for a new loan with a different lender, you should approach it the same way. That is, with your best foot forward.
Read more on our article on big banks vs. small mortgage lenders to help you in your lender selection process.
Remember to make sure you have your finances in order, check your credit score and credit file information, and understand the assessment criteria for any home loan application.
Want to learn more about refinancing? Head over to the Learning Hub and get started today.
1 More information on the research conducted by UBank, can be found here.