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What’s Involved – Refinancing

In the section “Need a Loan – Refinancing”, we covered some key things to know about applying to refinance existing loans.

What will be required to refinance existing loans is wholly dependent on what type of loan being refinanced and the purpose of the refinance.

Generally, though the prime areas to be considered by the borrower is will their financial situation be better placed after the refinance takes place. This will be a key consideration of any lender, being will the client benefit from the refinance.

Loan Security

If the loan to be refinanced is secured by property, there will most likely be a requirement to revalue the property, which will be a speedy process, performed by an external valuer form a national panel of lenders.

If the loan is secured by non-property assets, then again these assets will require some form of revaluation to determine the value of the new loan as a percentage of the asset value to determine interest rate and acceptable terms.

Prepare your budget

As always, with any loan type, it is important ahead of time to assess your financial situation and preferred standard of living when deciding how much you can comfortably afford to repay to the refinanced loan. You need to take into account;

  • your present circumstances and financial commitments;
  • any future plans that will impact your finances;
  • major changes to your family situation such as starting a family; and
  • other possible changes, such as interest rate rises, sickness, unemployment and or fluctuations in rental income on an investment property.

For assistance to prepare your budget please contact us or check out ASIC's website - MoneySmart.

Supporting Documentation

It's essential ahead of time to prepare a number of documents required by lenders to support your home loan application. The following is a list of potential supporting documents that the lender may request;

  • last 3 pay slips;
  • last tax return or group certificate;
  • letter form employer confirming allowances, overtime etc;
  • latest 3 or 6 months’ bank account statement;
  • latest 3 months’ credit card statements;
  • latest 3 months’ loan statements;
  • copy latest home insurance certificate on existing property;
  • copy of new insurance certificate on new investment property;
  • copy latest shire rates notice on existing property; and
  • copy of letter from real estate agent confirming new rental income on investment property.

Contact us and our team will happily work with you throughout this process to identify the documents required by the lender.

If the refinance involves the released cash will be used to set up a new business or the expansion of an existing  business, the lender may request the following;

  • detailed business plan;
  • cash flows for a period at least equal to the term of the loan;
  • set up costs (*if a new business in involved); and
  • past history of the business (tax returns).

Contact us for more details of lender requirements in this area.

Special Note:

Lenders will not commence assessment of any loan proposal until all the correct supporting documents they require are provided. Any time a lender identifies missing documents, they will suspend the application for 5 working days and only then will the file be picked up for re-assessment.

Need a Home Loan - Refinancing

More information if the refinance involves a business.

Contact us for more information regarding what is involved in applying for an owner occupier home loan.

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