How long does the mortgage refinance process take?

This depends on the complexity of your profile and the nature of the refinance in the first place. If you’re conducting an internal refinance, for instance, you can expect it to take less time, as your lender will already have all your documents and personal details on file. This may take as little as a few days to a week. However, refinancing to another lender might take several weeks to fully process. You should allow yourself ample time where possible for your lender to complete your application.

When should I not refinance my mortgage?

There are several instances where you may find a refinance isn’t suitable. It’s never ideal to do so soon after you take out your first mortgage to begin with, as that may not look good to lenders. The set-up costs may also not be worth it, particularly if your outstanding debt is low and/or you’re close to the end of your term.

Can I refinance to a different interest rate type?

Yes – you can refinance your home loan to switch from a variable rate to a fixed rate and vice versa. However, as mentioned earlier, you should be aware of the costs associated with breaking the terms of your fixed rate contract before doing so.

Will I have to pay stamp duty twice when refinancing?

No – you’ll only need to pay stamp duty on the actual purchase of your property, so you won’t need to worry about any subsequent loan switching or refinancing having an impact on stamp duty.

If I’ve paid off less than 20% of my home loan, will I have to pay LMI?

Yes – if you took out your original home loan with a sub-20% deposit and are yet to reach 20% equity in your home, you may have to pay Lenders Mortgage Insurance (LMI) again. You may be better off waiting until your home equity hits 20% before refinancing, as the thousands of dollars spent towards LMI may outweigh the potential interest saving in that time.

Will taking a guarantor off my mortgage increase my refinance rate?

It may – guarantors are often used by first homebuyers to help circumvent 20% deposit requirements and a lack of prior credit history, as adding them to a mortgage reduces the level of risk posed in the eyes of lenders considerably. However, you may refinance to remove them in the future, which could result in an increase in rate if your deposit is still below 20% or you haven’t been repaying your loan long enough to establish a strong repayment history. This won’t always be the case, though, so it’s useful to reach out to your lender for an indicative rate without your guarantor.

Will my rate decrease if I switch from a low doc home loan to full doc?

Yes – low doc home loans come with higher interest rates because they’re considered riskier than other loan types. This is because the borrower isn’t supplying full financials in the same way a standard applicant would, meaning the lender is inherently taking a greater risk in approving the application. If you’re able to switch to a full doc loan down the line, such as if you’re self-employed and have gained access to the required two years of tax returns, you can receive a reduced interest rate offer from your lender.