Check the value of your property
Before you either refinance your loan or increase the existing one you should check the value of your home. Banks will basis the loan they are offering based on value of your property as assessed by an accredited valuer.
Valuations are required by the bank so they have an estimate of what the property would sell for if they had to foreclose on your mortgage and sell themselves. As a result valuations are commonly lower than you might expect the property to sell for if you sold it yourself.
Commonly banks will value a property after they have assessed your loan application for all other eligibility criteria (e.g. income). This can lead you to lots of wasted time and effort if the valuation is lower than you expected.
To avoid this problem we can provide you with a value assessment report from the property data services that bank valuers use.
Some banks will allow us to arrange a bank valuation before you make a full application to ensure that your property is valued high enough to make a loan application worthwhile.
Purpose of Extra Money
If you are refinancing to borrow more money the bank will want to know why your want the extra funds. Each bank has a list of purposes they will or will not accept for borrowing this extra money. What one bank rejects another bank may accept.
How to get the maximum amount
Each bank has their own way of calculating how much they will lend to you. We have provided a “How much can I borrow” calculator on our site but this is only to be used as a general guide but the maximum amount you can borrow varies greatly between banks. As your mortgage broker we can assess how much you can expect borrow for each bank.
Change in approval methods
Because of changes to borrowing laws in the last few years you may find obtaining your loan application requires more paperwork than you needed before. Also the Government has introduced new restrictions on some types of loans which means that a loan you previously obtained may be harder or impossible to refinance.
If you’re looking for a better rate loan you need to take into account that interest rate is not the only loan cost and you should know that:
- It is likely that you will have expenses in leaving your current loan
- You may have establishment cost for your new loan
- Exiting a fixed rate loan can be very expensive
- Work out how long it will take a lower interest rate to “pay-back” the change-over costs
- You should check that a new loan has all the features you want, for example redraw
- Banks often have limited time special discounts which may last right through til the end of your loan
- Most borrowers are being offered discounted rates by the bank
- It is possible to negotiate on rate with the bank
Another reason to refinance may to obtain a feature your current loan doesn’t provide. This could include:
- Swapping your loan from Principle and Interest and Interest Only (or vice versa)
- Swapping from a Line of Credit and a redraw loan or a basic loan (or vice versa)
- Line of credit vs redraw facility
Changing your loan features may lead to increased to decrease borrowing costs.