People shop for great refinance deals and rates for many reasons. Often, it’s because they’re unhappy with their current lender. Or their current home loan isn’t meeting their needs.
But what if that’s not the case? What if you’ve been with the same lender for the past 3, 5 or even 10 years, and they’re great to deal with. You can’t imagine changing lenders. You just wish your interest rate wasn’t… so high?
If you’re one of the many homeowners who love their lender but not their interest rate, then don’t worry, there’s good news. By working with an experienced mortgage broker, you may be able to get a refinance offer with a great rate…without having to change lenders!
Yes, many lenders, including big banks will allow their existing home loan customers to refinance from the standard variable rate to obtain a better deal. Doing so could save you literally thousands of dollars every year.
Are you happy with your current home loan?
Before you start looking into refinancing options, it’s essential to evaluate your level of satisfaction with your current home loan.
Some questions to ask yourself before refinancing:
- What are my goals for refinancing?
- Is my current interest rate competitive?
- How long do I plan to stay in my current home?
- Can I qualify for a better loan?
- What is my current loan balance?
- How much equity do I have in my home?
- What is my credit score, and how might it impact my ability to secure a favourable refinancing deal?
- Have there been any significant changes to my income or employment since obtaining my current loan?
- Do I have the necessary documentation and paperwork ready for the refinancing process?
Why should I refinance my home loan in the first place?
Refinancing a home loan has its pros and cons depending on your individual circumstances. A mortgage broker can help you understand if it’s right for you. The benefits of refinancing can include:
You could save money off your repayments:
Even with rising interest rates, a small change to lower your interest rate can save you money off your mortgage repayments. A mortgage broker will liaise with your lender on your behalf to see what movement you can make on your interest rate.
You could consolidate personal debt:
If you have personal debt, such as credit cards or multiple vehicle loans, then it could be worth consolidating this debt into your mortgage. This can make it easier to manage debt repayments and can help you to get on top of your finances faster.
Consolidating your debt means you only have to make one monthly repayment with a low interest rate, instead of being charged 15% interest (or more!) and paying multiple creditors every month.
You could access the equity in your property:
If you’ve accrued equity in your current property then you may be able to refinance your home loan to access this equity. What is equity? It’s the difference between your home loan balance and the value of your property.
For example, if you currently owe $275,000 on your mortgage, but your property is valued at $415,000, then you have equity of $140,000. Equity can be used to finance a renovation or as a deposit on an investment property.
You could get access to more suitable mortgage features:
If your financial situation has changed since you first obtained your mortgage, then you may find certain mortgage features would now be more useful. The ability to make additional repayments could enable you to pay off your mortgage faster.
An offset account could manage your savings while also reducing the amount of interest you pay each month. And a redraw facility could help you achieve a future goal, such as a long-awaited renovation.
So, if you currently have a mortgage and you’re 100% happy with the service you receive from your lender, then that’s great news. But that doesn’t mean you have to put up with paying a high interest rate. Contact our experienced team today to find out more about better refinance deals and how you can refinance for a great rate…without having to change lenders!
What Are Some Good Reasons to Refinance with Your Current Lender?
There are a range of really good reasons why you might consider refinancing your home loan with your current lender. These include:
Maintain existing relationship and convenience:
One compelling reason to stick with your current lender when refinancing is to maintain the existing relationship and the convenience it offers. If you have been with your lender for a while, you may have established a level of trust and familiarity with their services.
Refinancing with the same lender allows you to continue enjoying their customer service, online banking platform, and any other benefits that come with your current loan. You won’t have to go through the hassle of setting up new accounts, transferring funds, or adjusting to a different lender’s policies.
Avoid additional costs and fees:
Refinance deals from a different lender often involve various costs and fees, such as application fees, valuation fees, legal fees, and discharge fees from your current lender. These expenses can quickly add up and erode the potential savings you may have gained from a lower interest rate with a new lender.
By staying with your current lender, you can potentially negotiate a better deal without incurring these additional costs, making the refinancing process more affordable and efficient.
Simplify documentation and approval process:
Since your lender already has your financial information on file, they may require less documentation and paperwork compared to a new lender who would need to assess your eligibility from scratch. This streamlined process can save you time and effort, allowing you to take advantage of better rates and deals without the burden of extensive paperwork. Moreover, your current lender may have a quicker approval turnaround time, enabling you to secure the refinancing quickly and smoothly.
Why not refinance my home loan with a different lender for better refinance deals?
While there is always the possibility of getting awesome refinance deals elsewhere, it also makes sense to stay with your current lender and renegotiate your home loan with them:
Loss of existing benefits
Your current lender might have provided certain benefits or features with your existing loan that could be lost if you refinance with a different lender. These benefits could include flexible repayment options, interest rate discounts, loyalty rewards, or favourable terms. Losing these benefits should be carefully considered when deciding whether to switch lenders.
Impact on credit score
When you seek refinance deals with a different lender, a new loan application will be submitted, which can result in your credit score being affected. Multiple inquiries within a short period can temporarily lower your credit score. If you’re planning to make other significant credit-related decisions in the near future, such as applying for a new credit card or seeking a car loan, the impact on your credit score should be taken into account.
Potential for dissatisfaction with new lender
While the prospect of lower interest rates or better loan terms may be enticing, there is always a level of uncertainty when dealing with a new lender. You may have had a positive experience with your current lender, including good customer service and efficient handling of your loan. Switching to a new lender could introduce unknown variables and potential dissatisfaction if the new lender doesn’t meet your expectations.
Loss of personalised support
Over time, you may have developed a rapport and established a level of trust with your current lender. They may have a deeper understanding of your financial situation and provide personalised advice and support. Refinancing with a different lender means starting anew and potentially losing the custom assistance and guidance you had with your current lender.
What You Need to Know About Refinancing Your Home Loan with Your Current Lender
Just because you’ve decided you deserve a lower interest rate, that doesn’t mean your current lender is automatically going to agree with you.
Refinance Home Loan Sunshine Coast tips: When engaging a mortgage broker to ask for a rate reduction, here are a few things to keep in mind:
Do some basic research:
You may feel like your interest rate is too high, but it’s a good idea to back this up with a bit of basic research. Start by confirming your current interest rate and ask a trusted mortgage broker to see how this compares with some of the other market offers available.
Understand the fine print:
Many interest rates are advertised with attention-grabbing headlines but don’t forget to read the small print. You may not be eligible for some of these mortgage products. Others may come with a great “honeymoon rate”, but how do the ongoing fees and charges compare to similar products with a slightly higher introductory rate?
Ask your broker for help in understanding all of the terms and conditions associated with the home loan products you’re comparing. They can help you to cut through the fine print and gain a clear understanding of exactly how a comparable product will stack up against your current home loan.
Honestly assess your current credit situation:
You’re unlikely to be accepted for refinance deals if your current financial situation isn’t stable. If you’ve only just started your own business, you’ve recently changed jobs or if you’re behind on repayments then you’re less likely to be approved for a home loan refinance.
Find out what your current credit score is and ensure that your report doesn’t contain any errors. Your broker will be able to give you an honest assessment on whether you’re currently in a strong position to refinance.
Is Your Current Home Loan Meeting Your Needs?
You may be 100% happy with your current lender, but how do you feel about the structure of your mortgage? Lenders usually offer a range of mortgage products so that customers can choose the home loan structure that will best suit their financial needs. So, before you decide to choose from the refinance deals your current lender is offering, think about:
Fixed vs. variable interest rate:
Do you want your new interest rate to be fixed? Or variable? Or some combination of the two? If you’re unsure which option would best suit your current needs, then talk through the various pros and cons with a mortgage broker.
Ability to make additional repayments:
Does your current home loan allow you to make additional repayments? If not, is this something you’d like to incorporate as a feature of your new home loan? Making additional repayments (even just a little bit extra each month) can significantly reduce the amount of interest you pay over the life of the home loan.
Redraw facility:
If you’re able to make additional repayments, do you want your new loan to include a redraw facility? This will enable you to reduce the total interest you’re paying, but you’ll still be able to draw on those funds should you need them in the future. Many homeowners find a redraw facility to be helpful when they’re planning to undertake a renovation.
Offset account:
An offset account works much like an everyday bank account, allowing you to make routine deposits and withdrawals. The difference with an offset account is that any funds sitting in the account will be “offset” against your mortgage total when your interest is calculated each month.
For example, if your mortgage balance is $320,000, but you have $20,000 worth of savings sitting in your offset account, you’ll only be charged interest for $300,000. Some lenders even offer multiple offset accounts allowing you to manage your day-to-day banking but still having every dollar working for you and not the bank.
How to Negotiate Refinance deals with Your Current Lender for a Better Interest Rate
This may sound like a battle of the underdog vs the giant corporate banking machine, but don’t panic! It’s definitely not as scary as it sounds. The truth is, many of the big banks are very responsive when it comes to market competition. Without their customers, they won’t have a business.
Most lenders aren’t going to go out of their way to notify their existing customers that they can get better refinance deals elsewhere. But, if you’re a loyal customer with a solid repayment history, they don’t want to lose your business.
Because of this, many of the big banks and major lenders are surprisingly agreeable when it comes to refinancing for a better rate, especially when you are using a professional mortgage broker who has an existing relationship with the lender. If they have a mortgage product with a lower interest rate available, then odds are high they’ll be more than happy to switch you over with minimal fuss.
Many homeowners are surprised to hear just how easy it can be to refinance with their current lender for a better interest rate. But the truth is, it generally costs more to attract a new customer (in advertising and promotional discounts) than it does to switch an existing customer over to a reduced interest rate.
Refinance deals: The Importance of Using a Mortgage Broker
You are able to approach your lender yourself to ask for a better rate, however, we find many mortgage holders get frustrated with the offer they receive on their own. When a lender is contacted by a mortgage broker, the message is loud and clear: “You’re about to lose this customer.” That’s the signal to your lender that they need to start doing everything in their power to retain your business. This is why it’s so important to get an experienced mortgage broker who specialises in refinancing involved from the very beginning. Not only will your lender be more likely to take you seriously, but you’re also far more likely to achieve a better end result.
What is the best bank to refinance a home loan?
You want to know if the refinance deal you have with your lender is the best one in the market, or if there are objectively better refinance interest rates using a universal standard. The truth is, as mortgage brokers, we adhere to the guidelines set by the Australian Securities and Investments Commission (ASIC).
These guidelines discourage us from claiming that a specific bank is the best for refinancing your loan. The reason for this is that the “best” bank for refinancing can vary depending on individual circumstances, financial goals, and preferences.
Instead of promoting a particular bank, our role as mortgage brokers is to assess your unique situation, understand your needs and objectives, and then provide you with a range of options from multiple lenders. We can compare different loan products, interest rates, features, and terms to help you make an informed decision that aligns with your specific requirements.
How to refinance a home loan with your current lender
Clearly, when it comes to refinancing your home loan with your existing lender, your best possible option is to talk to a mortgage broker. Let them know you want to refinance, but your preference is to stay with your current lender. That’s it! Your mortgage broker will take care of the rest.
Let SCF Solutions help you refinance with your current lender!
Here at SCF Solutions, we will do the research, assess your current financial situation and determine which home loan product would be most suitable for you and most beneficial for achieving your future financial goals. We will take the time to read the fine print and provide honest and unbiased advice on which home loan product we think would be in your best interests.
We can then contact your existing lender and take care of the whole negotiation process. Simple, easy and totally stress-free! Click the button below to set an appointment with one of our Sunshine Coast mortgage brokers.
