Your house is not only your home, but in most cases your biggest asset. Taking on a home loan is a sizable, long-term financial commitment, so it makes sense to shop around for the right one, not only when you’re making a first home purchase, but on a regular basis. You should review your mortgage at least once a year to ensure it suits your circumstances and ensure that you’re getting the best possible deal.
And if you find that your home loan is no longer ticking all the right boxes, refinancing can be a great way to make sure your loan suits you and your lifestyle.
If you’re ready for a change or want to lock in a better deal, see our guide to refinancing your home loan in four simple steps.
1. Think about what you want to achieve
Before you consider the how, think about why you want to refinance your home loan and what you want to achieve. The most common reasons to refinance are to:
- A lower interest rate
- Release equity (your property value less your home loan balance) to free up cash for renovations or other costs
- Consolidate debt to save on interest
- Change the structure of your mortgage or shorten your mortgage term
- Restructure your finances to make another property purchase.
Keep your reason for refinancing in the back of your mind throughout the entire process to ensure you achieve what you set out to. Read our blog post on when is the right time to refinance.
2. Review your current home loan
Before you think about how to refinance, take a close look at your current home loan. Make sure you know what interest rate you’re paying as well as any fees such as exit fees.
Think about features or products you need in a home loan, such as an offset sub-account or app to manage your account digitally day-to-day.
Once you know what you’re working with, you’re ready to compare your home loan to others on the market.
3. Research all your options
When researching your home loan options, make sure you keep in mind what you outlined in step 1, as you compare lenders.
Look at the comparison rates
It’s usually best to use the comparison rate when comparing loans. This is designed to help you understand the true cost of a loan including fees, loan term, interest rates and repayment frequency. Beware of loans with low interest rates and high comparison rates as these have higher fees and may cost you more in the long run. Nano does not charge any fees, that’s why you’ll always find that that the Nano comparison rate is always the same, or in the case of Interest Only loans, it’s lower.
See our blog article for more information on the difference between interest rates and comparison rates.
Understand the costs
You should be fully aware of all the costs you may incur before signing on the dotted line and refinancing. These could include:
- One-off costs from your current lender to discharge your loan such as:
- Discharge or exit fees.
- Break fees if you have a fixed rate home loan and your fixed term has not finished.
- One-off and ongoing costs from your new lender. According to Canstar, these fees can cost the borrower anywhere up $420 p.a. (Canstar, 2019). This could include fees such as application fees, settlement fees or loan administration fees.
Nano has no Nano fees across all our home loans, even when you apply for a new loan. This means, you never have to worry about being charged any hidden fees. The only charges you’ll have to cover is your old lender’s fees and any third party charges such as legal or government fees (which are out of Nano’s control).
Ready to start comparing?
Take a look at our home loan calculator to find out how much you could save by refinancing your home loan with Nano.
You can also download our Key Fact Sheet which is an industry prescribed document that allows you to compare home loans in a consistent format.
4. Get ready to refinance
73% of Australian’s believe that the home loan industry is too complex, and 72% believe there is too much paperwork and the process is slow (Pure Profile, 2021).
At Nano, you don’t need all the usual paperwork to process your home loan application. The application is entirely online, so all you need to do to start is gather the following information:
- The details of the property you are refinancing
- Your bank login details
- Identification such as a driver’s license or passport
Thanks to our system’s smart data capability, we can safely and securely approve your home loan in minutes, not weeks.
Canstar, Mitchell Watson, What Does it Cost to Refinance A Home Loan, 20 November 2019, https://www.canstar.com.au/home-loans/what-does-it-cost-to-refinance-a-home-loan/
Pureprofile research, commissioned on behalf of Nano, March 2021, using a sample of 1,000 Australian homeowners aged 18+.