Refinancing Traps To Avoid
Avoid these common mistakes and refinancing your home loan can be a simple, trouble-free experience.
Successfully navigating the refinancing process can enable you to take advantage of better rates and features, as well as provide finance for a renovation, construction or property purchase.
Mistake # 1: A history of arrears
Lenders want to avoid taking on risk, which is why they ask for at least the most recent six months of loan statements in order to check your conduct. It won’t work in your favour if you have missed/late repayments or have been over the limit on any lines of credit, so wait until you have six months of clean history before looking to submit a new application.
Mistake # 2: Too many credit inquiries
Every time you submit an application to a lender, it is recorded on your credit report. When the lender sees a number of applications they wonder why your application hasn’t yet been approved by another lender – this may be all the reason they need to decline the application. It’s our business as your mortgage broker to know how the criteria varies among different lenders and which lender you will have most success applying to. Alternatively, if you do have several items on your credit report which you can justify, we can help put an explanation together to present to the bank as part of the application process, which will alleviate any of the bank’s concerns.
Mistake # 3: Not planning ahead
When shopping for a new loan, you’re probably looking for one that will suit your needs now, but what about a few years down the track? If you move house or take a career break to raise a family, the loan you choose needs to accommodate these life changes.
Mistake # 4: Failure to lock it in
If you fail to lock-in the new favourable rate of interest on your new loan, it may increase by the time your loan gets processed. If you wish to lock-in a rate we can offer that facility.
Mistake # 5: Not taking costs into account
Sometimes the savings you could make by switching loans for a better interest rate are outweighed by the expense involved in refinancing. Make sure you know what up-front fees you will be charged by both your new lender and your outgoing lender and conduct a thorough cost-benefit analysis before you go ahead. We will always provide this for you, as part of our service.
Mistake # 6: Poor paperwork
Not supplying all the supporting documents when putting in your application can send it back down the bottom of the pile and the waiting game will start over again. It’s equally important when your loan is approved to review the loan documents properly before signing to ensure there are no errors and to ensure you understand the loan terms and conditions. We always read through your new contract before our client, when we help with the refinancing journey.
As your mortgage adviser we are experts at guiding borrowers through the paperwork and explaining what’s in the fine print. Give us a call anytime about helping you to successfully navigate the refinancing process.
*This information is general in nature and does not take into consideration your individual circumstances. Please contact us for further information.
