Refinancing your home loan is an excellent way to keep your interest rate competitive and mortgage repayments low. You can also get loan features that suit your needs by refinancing to a new deal. Since banks are usually filled to the rim with loan applications, refinancing can take as much time as a new home loan to process. That’s why we should do our part to speed things up by organising all the necessary documents.
Here are the four types of documents you’ll need to get together before applying for a refinance home loan:
You’ll need to provide proof of identification when completing a refinance application. You can use any three of the following:
- Driver’s licence
- Birth certificate
- Medicare card
- Credit card or debit card
- Concession card
- Council rates notice (mandatory for property ownership verification)
The lender can also ask you to provide other personal information, such as your current address, marital status and employment status.
Experienced mortgage brokers know all the necessary documents needed to refinance your home loan and can start saving you the time and stress right from the beginning of the application process. At Home Loan Experts, we can assign you an expert at refinancing. Please call us on 1300 889 743 or fill in our free assessment form to get in touch.
How can I prove my income for refinance?
Lenders want to see that your income is enough to cover your repayments, plus pay for your living expenses. The documents necessary to prove your income vary depending on whether you’re a PAYG employee or self-employed.
PAYG employees will need to provide:
- Your two most recent payslips
- A letter from your employer confirming your income
- Your last year’s group certificate
Self-employed borrowers will require:
- Two years’ personal tax returns
- Two years’ personal tax assessment notices
- Two years’ business tax returns (sole trader/company/partnership/trust)
- Two years’ financial statements
If you are self-employed but don’t have two years worth of documentation, you may still qualify by applying for a low-doc loan. For that, you would need:
- Your Australian Business Number
- 12 months’ Business Activity Statements showing a high turnover
- An accountant’s letter verifying your income
- Business bank statements showing a high turnover
- Interim financial statements
Most lenders have stricter criteria for low-doc loans. Please make sure you have a clear credit history and timely repayments for at least the last six months before applying.
Adding Your Second Income
You may not need to declare your second income on the loan application if your primary income is enough to cover your repayments and living expenses. However, suppose you decide to declare it. In that case, you will need to provide evidence to show that the income is regular and ongoing.
Current Debt Statements
Any outstanding debts will affect your ability to make repayments on your refinance home loan. That is why lenders require you to disclose all your debts on your application. You will need to gather any documents related to:
- Your current home loans
- Credit cards
- Car loans
- Student loans
- Personal loans
Lenders will generally want to see the records for other assets you own, such as:
- Savings accounts
- Investment properties
- Shares and securities
- Bonds and debentures
- Gold, silver or platinum bullion
Should I Use A Mortgage Broker Or Bank?
Now that you have the documents you’ll need for a refinance home loan, can you go directly to a bank instead of using a mortgage broker?
The simple answer is yes. However, working with a mortgage broker can give you benefits a bank may not be able to provide, such as:
Home Loan Options
Mortgage brokers will have a variety of home loan options and interest rates from multiple lenders they can offer. They are most concerned with matching you with a home loan that fits your situation. A bank can offer you only its own products, which may not be suitable for you.
Working In Your Best Interests
Mortgage brokers now operate under the Best Interests Duty Act when providing credit assistance to consumers. In other words, we must always act in your best interest when recommending a home loan. On the other hand, if you go to a bank directly, then the bank can act in its own interests and sell you the product that gives it the most value instead.
For example, your bank may be offering a refinance cashback offer of $2000. When you apply directly, you’ll not be informed if another bank you can qualify for has a refinance rebate of $3,000. A mortgage broker, however, must tell you if there’s a better offer available.
Liaising With All Concerned Parties
A mortgage broker will liaise with your lender, valuers and solicitors to ensure a smooth application process. They will be your main point of contact throughout the process to make sure you are in the loop.
Getting You The Best Deal
Mortgage brokers are experts at home loans and understand how to present a mortgage application in the best possible manner. A strong application is usually key to getting a good deal from a bank. Mortgage brokers also have solid relationships with lenders, built over the years, and can negotiate a better deal for you than if you were to apply directly.
For example, when refinancing, your age and retirement plans can determine the loan term you might be eligible for. If you intend to retire in the next 10 years, the lenders may not refinance your loan for a loan term greater than 10 years. However, mortgage brokers can help you in such situations and get higher loan terms by guiding you through appropriate exit strategies suitable to your personal situation.
On top of all these benefits, working with mortgage brokers, particularly at Home Loan Experts, is usually free. Call us on 1300 889 743 or fill in our free assessment form, and start your refinancing journey today!