Refinancing refers to the process of paying out your current home loan by taking out a new loan, either with your existing lender or through a different lender. Refinancing is sometimes referred to as 'loan switching', so if you've got the itch to switch, your n1 finance broker can help you to investigate your options.

Thinking about switching loans?

A broker can help you determine whether you'll save money when you refinance. Working with a professional who has already established a strong relationship with several different lenders also allows you to access hundreds of offers. Our home loan experts are focused on putting your needs first and will assess your individual circumstances with the loans available.

Reasons to refinance

1. Secure a better interest rate

One of the key reasons home owners choose to refinance their loan is to secure a lower interest rate and reduce their monthly repayments. However, refinancing can come with some costs, so it's essential to weigh up the savings of refinancing against the expense involved.

2. Switch between variable/fixed rates

If you’d prefer the certainty that repayments will stay the same for a period of time, you may wish to switch to a fixed rate. Conversely, you may decide you'd like to take advantage of a lower variable rate as you can accept the risk that rates may raise in future.

3. Access equity in your home

Your home is likely to be one of your most valuable assets, and by harnessing home equity you have the opportunity to build additional wealth or simply achieve personal goals. Find out more about accessing your home's equity.

4. Consolidate debt

Refinancing your home loan can provide an opportunity to streamline your debt, and potentially reduce the overall interest you're paying on multiple debts through the process of 'debt consolidation'. It means folding several high interest debts into one lower rate debt – which could be your home loan - and may reduce your total monthly repayments.

However, it's important to note that debt consolidation can come with some downsides. It can turn a short term debt like a personal loan into a long term debt (your mortgage), and that means paying interest on the balance for a much longer period which could cost you more in the long run. For debt consolidation to be truly cost effective, you need to commit to making additional repayments to pay off the enlarged loan as quickly as possible.

5. Access additional home loan features

You may wish to explore a loan that includes:

Flexible repayments : Making extra repayments at no additional cost to help pay off the loan sooner.
Repayment holiday : A break from repayments or reduced repayments to cover career changes or breaks e.g. maternity leave.
Offset account : Having a savings or transaction account linked to your loan. The balance of the linked account is deducted from, or offset against, the balance of your loan when the monthly interest charge is calculated.
Redraw facility : Enabling you to withdraw any additional repayments you have made on your loan. Handy if you need cash in an emergency.
Flexible rate options : Dividing your rate between fixed and variable components, or even making interest-only payments for a period.
Loan portability : The ability to take your loan with you when you move from one home to another without the expense and hassle of arranging a new loan.

How to refinance

Investigating the options

Your broker can compare hundreds of loan options from up to 28 leading lenders, including the major banks, saving you time and legwork. You can find out very quickly whether your existing home loan is still right for you, or whether you could potentially benefit from switching.

The refinancing process

Once you have settled on a particular loan, refinancing works in much the same way as applying for your original loan - and your N1 finance broker can guide you through the process.

You will also need to have some important paperwork on hand to support your application. This may include:

Recent pay slips
Statements for your existing home loan and any other loans
Your latest council rates notice
Evidence of the building insurance policy you have in place for your home or the property to be refinanced.

Once your loan is approved, your new lender will pay out your current loan on your behalf and you can commence repayments on the new loan.

Behind the scenes, the title deeds to your property will be passed over to your new lender and a Discharge of Mortgage document lodged with the Land Titles Office in your State or Territory.