Refinance Your Home Loan With A Mortgage Broker

There are many reasons you should consider refinancing your home loan:

• Get a cheaper interest rate and lower your monthly repayments.
• Access equity to buy an investment property, renovate, build and more.
• Bring your high-interest debts like credit cards, personal loans and car loans into a debt consolidation home loan.
• Save your home if your home loan is in arrears.
• Refinance from a specialist lender to a major lender after you’re past your bad-credit issues.
• Take advantage of tax benefits.
• Refinance to a home loan product that helps you repay your home loan faster.
• Refinance to grow your business.

Find out more by reading our page on the benefits of refinancing.

Using a mortgage broker can be worth it when you want to compare more than one lender, understand which lender policies suit your circumstances, calculate the true cost of switching or reduce the time and paperwork involved.

A broker may add particular value when you are self-employed, want to access equity, have a higher LVR, have changed jobs, have credit issues or need a lender whose policy differs from your current bank's.

It will not always be necessary to switch lenders. Your current lender may make a competitive retention offer, or the likely savings may not justify the costs. A good refinance broker should compare the alternatives and be prepared to explain when staying put may be the better outcome.

Potential benefits of using a mortgage broker to refinance your home loan include:

• Comparing suitable products and lender policies from a panel rather than approaching only one bank.
• Receiving a pre-assessment before a formal application is submitted.
• Getting help to compare the current loan, a retention offer and external options on a like-for-like basis.
• Understanding the full switching cost, possible LMI, break costs and break-even period.
• Having support with the valuation, documents, application, lender follow-up, discharge and settlement.
• Working with a broker who must act in your best interests when providing credit assistance.

Potential disadvantages to consider when using a mortgage broker to refinance include:

• A broker's lender panel does not include every lender or home-loan product in the market.
• Brokers are generally paid lender commissions, and some may also charge a fee. These amounts should be disclosed.
• Broker experience, lender access, communication and service quality vary.
• A broker cannot guarantee a lender's valuation, approval, interest rate or processing time.
• The underlying refinance may still be unsuitable if the switching costs or longer loan term outweigh the benefit.

Ask your broker which lenders they can access, how they are paid, why each option is suitable and what alternatives were considered.

Lenders generally pay mortgage brokers a commission, so borrowers often do not pay the broker directly. The broker must provide information about the commissions they may receive.

At Home Loan Experts, customers rarely have to pay for our services. A broker fee may apply in some situations, depending on the complexity, size or type of loan. If a fee applies, it will be explained and disclosed in writing before you proceed.

Broker remuneration is separate from the lender and government costs of refinancing. Ask for a clear explanation of any broker fee, lender fees, commission and other costs before authorising an application.

Many straightforward refinances may involve roughly $800–$3,000 in lender and government costs before any Lenders Mortgage Insurance or fixed-rate break cost. The actual amount can be lower or substantially higher, depending on your existing loan, new lender, property, state or territory and LVR.

The potential costs when refinancing your home loan include:

• Discharge or termination fee: Charged by the existing lender when the current loan is closed.
• Fixed-rate break cost: May apply when a fixed-rate loan is repaid before the fixed period ends.
• Application, establishment or settlement fee: May be charged by the new lender.
• Government registration and discharge fees: These vary by state or territory.
• Valuation, title search, or administrative fees: These depend on the lender and the transaction.
• Ongoing package or account fees: Include these when comparing the total cost of the new loan.
• Lenders Mortgage Insurance: LMI may apply when the proposed loan is above 80% LVR and can materially increase the cost.
• Any disclosed mortgage-broker fee: This is uncommon for many standard HLE refinances but may apply in some circumstances.

Total refinance cost = lender fees + government charges + any break cost + any LMI + any broker fee - confirmed rebates or refunds.

Break-even period = net upfront refinance cost ÷ expected monthly saving.

For example, if the net cost is $1,800 and the expected monthly saving is $250, the simple break-even period is about 7.2 months.

Going directly to your bank may be simple when you only want to request a lower rate or switch between that bank's products. The limitation is that the bank can offer only its own products and policies.

A mortgage broker can compare your current lender's offer with suitable options from their panel, assess how different lender policies apply to you and manage the application. The limitation is that a broker's panel does not cover the entire market.

The better route is the one that gives you a suitable loan at an acceptable total cost, with the features and service you need.

A mortgage broker should compare more than the advertised interest rate. The assessment should consider your goals, the comparison rate, upfront and ongoing fees, remaining loan term, repayment structure, features, LVR, borrowing capacity, lender policy and the period you expect to keep the loan.

The broker should present suitable alternatives, explain how each option works and costs, disclose relevant fees and commissions, and explain why the recommendation is in your best interests.

At Home Loan Experts, we compare suitable options from our panel of more than 50 lenders. We can also include a retention offer from your current lender in the comparison.

A common benchmark is at least 20% equity, which means the proposed loan is 80% or less of the new lender's property valuation. Refinancing at or below 80% LVR can often help you avoid paying Lenders Mortgage Insurance.

Refinancing may still be possible above 80% LVR. Some lenders may consider refinances up to 95% of the property value, although LMI will usually apply. Approval also depends on borrowing capacity, credit history, loan purpose, property and lender policy.

LVR formula: total proposed loan amount ÷ lender's property valuation × 100.

For example, if the lender values the property at $800,000, an 80% LVR is $640,000. If the existing balance is $550,000, the potential usable equity before costs is $90,000. The lender must still be satisfied that you can afford the proposed loan and that the equity-release purpose meets its policy.

A broker can compare lower- and higher-LVR options and explain whether the benefit is likely to justify any LMI cost. You can also estimate the potential premium with our LMI calculator.

A mortgage broker cannot guarantee that refinancing will save you money. The potential benefit depends on your existing rate and fees, the new loan's rate and fees, the balance, remaining term, repayment strategy, switching costs and how long you keep the new loan.

Estimated net benefit = projected interest and fee savings over the comparison period - total refinancing costs.

Be careful when the new loan restarts or extends the term. Lower required repayments can improve cash flow while increasing the total interest paid over the life of the loan.

Use our home loan refinance calculator for an initial estimate, then ask a broker to compare the assumptions and loan features.

Refinancing may not be worthwhile when the costs, risks or lost features outweigh the expected benefit.

• The rate difference is too small to recover the switching costs within the time you expect to keep the loan.
• A fixed-rate break cost or new LMI premium makes the refinance expensive.
• You expect to sell the property or repay the loan soon.
• The new loan extends the remaining term and materially increases total interest.
• You would lose valuable features, flexibility or service.
• Your current lender makes a suitable retention offer that is more cost-effective.
• Your financial or credit position means the available alternatives do not improve your position.

A useful broker review is not only about finding a new loan; it should also help you decide whether switching now makes sense.

A mortgage broker may be especially useful when your refinance does not fit a standard bank scenario. This can include self-employed or variable income, recent employment changes, credit issues, a higher LVR, equity release, debt consolidation, unusual properties, multiple income sources or refinancing away from a specialist lender.

Home Loan Experts specialises in lender-policy assessment and complex home-loan scenarios. We cannot guarantee approval, but we can identify relevant lender policies, explain the likely issues and help structure a stronger application where a suitable option is available.

The documents depend on the lender and your circumstances.

• Identification
• Recent income evidence, such as payslips or self-employed financial documents
• Current home-loan statements
• Statements for credit cards, personal loans and other liabilities
• Property details and evidence supporting the purpose of any equity release
• Evidence of savings or other assets where relevant

You do not need to collect every possible document before your first broker conversation. Once suitable lender options are identified, we can give you a targeted checklist. See our refinance document guide.

There is no universal timeframe. The timing depends on the lender, valuation, document quality, application complexity, formal approval, loan-document signing and how quickly the existing lender processes the discharge.

A broker can reduce avoidable delays by selecting an appropriate lender, preparing a complete application, arranging the valuation, responding to lender questions and following up the discharge and settlement. The broker cannot control every lender or settlement timeframe.

Choose a licensed refinance mortgage broker who can clearly explain their lender access, fees, commissions, recommendations and service process.

Ask your mortgage broker the following questions when refinancing your home loan.

• Which lenders are on your panel, and which lenders or products can you not access?
• Will you compare my current lender's retention offer with external options?
• How are you paid, and will I pay any broker fee?
• Will you show me more than one suitable option and explain the total cost of each?
• How will you assess LVR, LMI, break costs and the refinance break-even period?
• What experience do you have with borrowers in circumstances similar to mine?
• Who will manage the valuation, application, lender follow-up, discharge and settlement?
• What support will I receive after settlement?

Also check the broker's credit licence or credit-representative status, recent customer feedback and complaint process.