Ian Jordan from Selector Group shows you how refinancing could save you and your family money.
I want to discuss something that is amazing in the banking fraternity at the moment. There is a mortgage war going on. I’ve got discounts from lenders that I was previously not able to, and, as a result, I want to cover off the topic of refinancing.
It may or may not work for you, but it’s always worth having an idea of the refinancing process. Right now, I think there are some great opportunities to save a bit of money on your loan, but it is very important to make sure you are switching for the right reasons.
One of the big things we do when we are looking to refinance is we go through a six stage process to ensure that you are going to get the right loan. The steps are:
1. Compare what you have now with what you want to get
When you initially set your loan up we are assuming that it was a reasonable loan and it had the right structure but your life may have changed so it is always good to look at the structure to make sure that you are benefiting the most from your loan.
Is your loan principal and interest or interest only? Is it fixed or variable? These are some of the things we are looking at to make sure we are getting the right amount of money in the right terms. It will always save you money if you correctly structure the loan. If we only focus on rate we are likely to get the wrong structure in the long term and that is going to affect your cash flow.
2. Look at your functionality
When you set up your loan, you probably had a situation where you wanted to link some accounts and you had some check books and you wanted internet banking. You need to have a very clear idea of the functionality. Functionality might mean an offset account or a line of credit. We need to understand how you would like your loan to function and make sure we get that put in place.
3. Pricing and finding the Bank that offers those products
The pricing is very important. It’s great to see a sticker rate on television saying 5.79% or 5.80% but often the hidden details like the fees and charges really add up. By comparing apples against apples along with your structure and your functionality we are able to get you the right loan.
4. Look at the submission
You have to gather all the information and it is almost like going for a whole new loan and the only difference is that you have an existing loan and as a result there probably isn’t as much time pressure. Once we understand and have gathered all the information, we do the loan submission. Either at the same time or maybe after the loan has been approved, we would do a valuation on the property. This is because the lender really wants to understand that the property is worth what you say it’s worth and also make sure it is saleable from their perspective. They want to make sure that they can actually put that property on the market if the worst case comes.
5. Get an approval
When you are formally approved you have unconditional approval and the next step is to issue new documentation. You can either come in or talk over the phone and we would talk you through those mortgage documents.
6. Get ready for settlement
Refinancing, it is a little different to your initial loan when you bought the property, because it is almost an electronic process and we are able to put in a settlement date and transfer funds. You don’t normally have to have solicitors attending settlement like you did when you purchased your home.
That is the refinance process in a nutshell. If you are interested in refinancing, it’s probably a good time to come and have a chat with the Selector Group. There is absolutely no cost in doing so.
If you want to know if refinancing is right for you, call the Selector Group on 1300 161 600.