Our guide to refinancing your home loan

If you’re thinking about refinancing your home loan, you’ll want to cover your bases first. It’s the kind of decision that can impact your long-term financial position – so we want to make sure you have the right information, and you’re asking yourself the right questions.

Review your current lending

Reviewing your home loan is a smart way to ensure you’re getting the best value for your money. Even if your home loan is locked in, there’s always room to move. Have a chat with your lender to see if changes can be made to your existing loan. You might find that a simple interest rate change could save you from refinancing at all. You can also book a home loan health check with our dedicated lending specialists to review your current home loan and identify opportunities to save you money.

Consider an offset account

An offset account is a home loan with a transaction account attached to it. The way it works is that the balance in your offset account is subtracted from your home loan balance before the interest is calculated. The more money you have in your offset account, the less interest is charged on your home loan. You can even have multiple offset accounts to split your living and other expenses. Our offset calculator can help you see how much time and interest you could save on your home loan with an offset account.

Weigh up the costs and benefits

No matter how appealing a home loan is, it’s important you’re still saving money or reducing your home loan term. Here are some points to consider:

• If you’re looking at a lower interest rate, make sure the home loan doesn’t have fees that will end up costing more in the long run. A good rule of thumb? Any refinancing fees should be recouped within 12-18 months.
• Base your calculations on long-term interest rates for a true reflection of savings. Use our repayment calculator to help you estimate what your repayments could be
• If you’re switching from a variable to a fixed rate (or vice versa), make sure it works for your current and future circumstances
• Find out if you’ll have greater access to your home’s equity if you refinance
• Chat to your lender about early termination penalties or break costs attached to your current loan if you refinance.

A word on credit card debt

When you apply for a credit card, your bank has to be satisfied you can repay the limit at its interest rate within three years. If you’re applying for a new home loan, or refinancing, this can actually impact how much you can borrow. You’ll want to review your credit card commitments so that you’re either reducing or paying out your debts as early as you can.

Applying with a new lender

Refinancing with a new lender means you’ll go through the full home loan application process with them. Typically, you will need to provide the new lender with

• Completed and signed application form
• Last two PAYG payslips
• Last three months of bank statements for the main transactional account and loan being refinanced
• Last three months of credit card statements
• Certificate of currency – building insurance cover
• Copy of your driver’s license and passport.