No matter what your reason is for wanting to complete a refinancing mortgage, engaging a broker will help ensure you get the best possible deal.
If you’ve decided that it’s probably time to switch banks for a refinancing mortgage and you’ve requested your broker call-back here, your broker we will first signal to your existing bank that they have just one last chance to put their very best offer forward as you are shopping around now and we won’t go back to them later on.
One of the lessons that the banks have learnt, is that if they want to encourage people to switch mortgages to them, they need to make the process easy. Banks have really streamlined this process now. They employ specific team members to handle the migration so that it is relatively hassle-free.
"So what does the switching process look like?"
The process is just 4 simple steps:
- Signing new loan documents
The team at Approved Mortgages know that you are busy and your time is valuable. We are committed to helping make the refinancing mortgage process as seamless and hassle-free as possible. We have years of experience helping people make successful home loan switches and can help you do so also.
"Are there any important factors that I should be aware of?"
When the time comes to refinance you will be assigned a bank staff member to assist with the switch. They will work with you to arrange a suitable time for you to stop in at your local branch. They can even help by closing your old bank accounts and transferring over any automatic payments you need. Like a lot of things these days, you will be required to provide 2 forms of ID and proof of your address (like a bank or utility bill - something that has your name and address on it). They will have a few forms for you to sign and can answer any banking relating questions that you have.
Switching all of your banking or just some of it
When you refinance your mortgage you don’t always have to switch all of your banking. However increasingly, you will be expected to have your income/salary paid into your account with the new bank. You will be expected to keep this in place for at least 2 years, especially so if you have been given a cash contribution as part of the new loan being established.
We find most people prefer to have all their accounts with just one bank to keep things simple. This does make sense but when people are looking to own an investment property also, we prefer that clients keep their investment property lending with a separate bank than the lending for their home.
Signing new loan documents
If you proceed with switching your mortgage to another bank, your solicitor needs to be involved in the process. This is because they handle the legal aspect of shifting the mortgage in favour of the new bank. More often than not, most lawyers charge less than $900 for this process when it is straight forward. The cash contribution (see below for more info) provided by the new bank is ideally used for paying for this.
Your lawyer will contact your old bank and request whats called a ‘discharge’. This outlines the amount required to fully repay the loan from your old bank, as it will show what the ‘total’ amount of the new loan with the new bank needs to be. If you are on a fixed rate with your old bank this discharge amount will factor in any break costs that may apply. New loan documents will be drawn up for you and need to be signed with your solicitor witnessing the signature.
The whole refinance (switching banks) process requires a bit of effort, it can however save you money and get a home loan that fits your lifestyle. Involve us so that we can help assess if it is worthwhile undertaking. We’ll handle the stresses involved, do the running around for you, negotiate sharp interest rates and terms and also show you ways you can reduce the amount of interest you pay. Best of all we don’t charge you a fee, as the banks pay our fees from their profits.
"What about these Cash Contributions?"
Banks understand that there is time, effort and cost involved with refinancing a home loan. In an effort to entice customers to change providers, some banks may be prepared to offer you a cash incentive to switch. Sometimes these cash contributions are large enough to cover the costs of the legal fees and the break costs if you are on a fixed rate.
Cash contributions are provided at the discretion of the bank. If a bank is going to provide a cash contribution, a rough guide is about $500-$1000 for every $100,000 in new borrowing. For example, a home loan of $600,000 may mean a Cash Contribution of between $3,000-$6,000. Talk to the team at Approved Mortgages about maximising cash contributions today.