So, you’re thinking about replacing your current home loan with a new one (AKA refinancing).
It’s a hot topic right now (and for good reason, it could lead to decent $$$ savings).
But what’s involved in the process? And how long does it take to refinance a home loan in 2024, anyway?
In a nutshell, refinancing can take anywhere between 4 and 10 weeks. The timeline can vary depending on the lender you go with, how complicated your application is, and how quickly you get all your paperwork together (to name a few factors).
So as much as we’d like to give you a definitive answer, it does depend. And to get a better feel for the time involved, it helps to understand the refinancing process and things you can do to help speed things up.
So, how long does it take to switch home loans? And what’s involved?
Now you know refinancing can take from 4 to 10 weeks. The next question a lot of homeowners have is why? Well, the timing can depend on many factors.
Things like…
How quickly you get your paperwork together
You’ll need docs to prove your income, identity and financial situation. And the quicker you pull this all together, the faster your home loan expert can get things moving for you.
The lender you go with
How fast do they work? What’s their lead time like? The speed of a lender can significantly impact how long it takes to refinance your mortgage (our experts know which ones have big backlogs and which ones are on the ball at any given time).
How strong your application is
What lenders *really* want to know is whether you’ll be able to pay your loan back. So, things like credit score (AKA how well you have managed other debts in the past) are a whopping consideration. A strong application is likely to get processed quicker.
How thorough your info is
If you provide accurate and thorough information from the get go, this can speed things up (because it means the lender doesn’t have to reach out for additional details which can slow the process).
How straightforward your situation is
Every situation is unique. Yet some are a little more straightforward than others. If you’ve got one property, earn PAYG income and a low LVR (Loan to Value Ratio) — it may move things along more quickly. But if you’re refinancing multiple properties, are self-employed or need a guarantor — it might take a little longer for the lender to review.
Ok, how fast can you refinance a mortgage (if you do all the “right” things)?
If you get aaaalllll your ducks in a row, refinancing can take as little as 4 weeks (but hey, we can’t make promises because it’s ultimately in the hands of the lender).
If you want to speed up the refinancing process, you could try…
Choosing your lender wisely
Our home loan experts can point you toward the lenders who (historically) work quickly. Start here if you’re keen to get going asap.
Getting your docs in quickly and accurately
This can save a whole lot of unnecessary back and forth. Learn more about what docs you need for a home loan.
Making sure your credit score is schmick
Doing things like paying your credit card off on time, paying down loans or lowering credit card limits can help boost your credit score.
While it’s in the hands of a lender, a good mortgage broker will make sure you’re kept in the loop along the way and handle a lot of the conversations with the lender.
What can slow down the refinancing process?
Just like you can speed up the refinancing process, some actions can also slow it down.
Things like…
Errors in your application
This’ll just create more back-and-forth to set things straight.
Forgetting documents
Your mortgage broker and secure Finspo portal will make sure you’re across all the docs you need.
More complex situations
Things like self-employment, guarantors and Lenders Mortgage Insurance might require a more detailed review from the lender.
A “higher risk” credit score or Loan-to-Value Ratio (LVR)
The lender will want to do more checks and balances if the loan is perceived to be riskier.
Your refinancing questions, answered
What’s involved in refinancing a home loan?
Wondering why the time to refinance can vary so much?
Well, there are a few steps involved…
- Meet with a broker — chat through your refinancing goals with an expert.
- Prepare your docs — things like identity, income and financial statements.
- Explore your options — a good home loan expert will give you several to choose from.
- Apply for a home loan — with the help of your broker, of course.
- Property valuation — know what your property’s worth.
- Loan approval — the *official* thumbs up from your lender!
- Settlement — booyah!
When should you refinance?
There’s no straightforward answer because every situation is different. Buuuuut to give you a rough idea, the average home loan duration for Australians is 4-5 years* and refinancing makes up a large part of this.
You might consider refinancing when…
- A lower interest rate is available
- Your fixed rate is due to expire (it’s a good idea to plan ahead)
- Your property value has increased and you’d like to tap into equity
- You’d like to lower your repayments
- Your situation has changed (things like jobs, family, goals).
What if my rate changes midway through refinancing?
Ah, variable rates are tricky things. They can keep changing suddenly and with little notice. And if your rate changes midway through refinancing, you’ll move to the current rate at the time of settlement (our interest rate tracker will help you track the movement of your lender’s rates compared to others).
Knowing this, it’s important to be aware of the rate you’re quoted and if it can (or is likely to) change before you settle. A good mortgage broker will also keep you in the loop at every step.
If this uncertainty creates unease for you, you could consider a fixed rate (then take a “rate lock” on your application to avoid changes before settlement).
How often can you refinance?
There’s no set rule. But it’s worth reviewing your home loan every year or two (with the help of a home loan expert) to avoid the mortgage loyalty tax.
Since refinancing comes with a few fees, you can weigh up whether refinancing is right for you with help from an expert.
What are the costs of refinancing?
There’s no such thing as a free lunch.
There are fees associated with refinancing (like government fees, bank discharge fees and break fees if you’re on a fixed rate). But in many cases, these fees are outweighed by the benefits of refinancing. A home loan expert will help you figure out if it’s worth your while.
How long should it take to refinance a mortgage?
Like many things in the world of home loans, it depends.
But by planning ahead, knowing what to expect, and doing all the right things, you can help make the refinancing process a smooth one.
Not only that, having a home loan expert on your team (that’s us!) can keep you updated along the way and manage all the back-and-forth with the lender.
If you’re ready to see if refinancing is right for you at this point in time, get started with a Finspo home loan expert. We’ll happily answer your questions (with zero obligation to go ahead).
Book your time with a Finspo home loan expert today.
*Finspo internal analysis of average Australian loan durations.
