5 things to keep in mind before refinancing

Something to keep in mind when looking to refinance your home loan is lenders vary greatly in what they can offer. You may want to find the lowest interest rate possible, however there are a number of other factors to consider that could save you time and money.

Some areas lenders can vary greatly include:

1. Serviceability criteria. Each lender has its own criteria to determine whether you can easily make the repayments. This can impact the amount it may be willing to lend you and whether you qualify for a loan in the first place.

2. Fee differences. Loans cost more than just the interest rate. Some charge annual fees, fees for features and even things like lenders mortgage insurance (LMI) can come at a different cost depending on the lender.

3. Turnaround times. Some lenders can approve loans much faster than others. It’s important to factor in the approval times when changing lenders and to factor potential extra time into your calculations to determine whether it impacts your cost saving compared to another lender that may be faster.

4. Lending criteria. Some lending criteria are the same across lenders – such as being at least 18 years old and your resident status. However, other criteria vary depending on the lender, such as your employment (including if you are self-employed) and the details of the property (some may have restrictions on building types or locations).

5. Promotions. Depending on your situation, there may be promotions available that you could qualify for. For example, some lenders offer “green loans” if a home fulfils certain sustainable, energy-efficient criteria. Others offer special deals for people in certain professions including the medical industry.

On top of this, you may want to structure your loan differently to better suit your current circumstances or goals. The structure of your loan can make a difference to your repayments, interest you pay and time it will take to pay off.

As a broker, I work with lenders day in, day out, and have a good understanding of how long approvals are taking and how they vary in their policies and offerings. If you’re considering refinancing, arrange a free, no-obligation chat. I’ll assess your situation and make recommendations in your best interest.

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Licensing statement: Rayne Finance ABN [70 605 100 838] is authorised under LMG Broker Services Pty Ltd Australian Credit Licence 517192. Disclaimer: (1) As with any financial scenario there are risks involved. This information provides an overview or summary only and it should not be considered a comprehensive analysis. You should, before acting in reliance upon this information, seek independent professional lending or taxation advice as appropriate and specific to your objectives, financial circumstances or needs. This publication is provided on the terms and understanding that: (2) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication. (3) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to the maximum extent permitted by the law to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication.

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What is lenders mortgage insurance? (LMI)

Lenders Mortgage Insurance, or LMI, is designed to protect the lender, not the borrower, in case the borrower defaults on their loan (i.e. can no longer make their repayments). If the borrower defaults, the lender can repossess the property, however there’s a risk that the property price could have fallen and the lender could suffer a loss. LMI covers this risk.