Your guide to refixing and refinancing home loans

We’ve all got plenty on our plates these days. Work, family, money, partners, pets, friends – the list obviously depends on each individual, but there’s one thing homeowners in particular know all too well. Mortgage terms.

There will come a time when your existing term ends, and when it does, you need to know exactly how to refix or refinance your loan.

Now, you can leave it to the lender, who will put you on a new fixed-rate or floating rate loan, but this convenience could end up costing you. Taking the time to find a better deal could literally shave time and money off the length of your mortgage. And you may not even need to change providers.

What do refixing & refinancing mean?

Both these terms involve securing a new mortgage deal, but there are some differences you need to be aware of:

• Refixing – Applies only to fix-rate home loans that are set at a new rate with your existing lender. Fixed-rate loans have a maximum term length of 5 years
• Refinancing – When you move to a different lender, whether on a fixed, floating or a mixture-of-the-two home loan

To fix or float?

Choosing what kind of mortgage you want depends on your personal circumstances. Do you prefer the security of knowing exactly what your repayments will be for the next few years, or are you willing to see how the markets react?

If interest rates are going down, a fixed rate may not look as attractive as a floating rate, which would lower repayments at that time. However, this goes both ways. If interest rates rise, your fixed-term payment remains the same while a floating rate would likely increase.

People often decide to get a mixture of the two, so the loan is both fixed and floating, providing the best of both worlds.

Step 1: Check your interest rate against the market

Whether you’re after fixed, floating, or a mix, you’ll first need to examine the interest rates. Is your new rate similar to what’s on offer, or is it higher? It’s important to do your research here, comparing what other lenders are offering, so you can bring this information to your current lender to support your case.

Step 2: Talk to your current lender

Once you’ve done your research, you need to speak to your current lender. If their rate is above what the market is offering, you can ask about this and see if you can have it lowered. If they agree, perfect. However, in the event they stick to their guns on a higher rate, it’s time to shop around.

Step 3: Have a look at your options

Having already done some research, you’ll be in a good position to examine the intricate details of mortgage options on offer. It’s important you take your time here and ensure this new mortgage offers the features you need, such as overpayments or redraws.

And don’t just look at the interest rate. Make sure you compare the application and/or ongoing fee costs, as well as the exit costs from your existing mortgage. There wouldn’t be much point finding a lower rate if you pay through the nose to get out of your existing contract.

Step 4: Submit your application

Once you’ve found a new lender with rates and terms you like, you’ll need to gather up the documents and submit your application. Once your application is accepted, your previous and new lender will handle the details of transferring the loan. Don’t underestimate the amount of paperwork you’ll need to do for this new application. It’s vital you get all the documents and details needed for the application.

Sound too hard? Let us do it for you

There is an easier way than having to follow all the steps above – you get us to do it instead. Here at Lending People, we pride ourselves on finding the perfect lender to suit your needs. It’s our job to do the hard work, all we need from you is some initial details on your income and expenses.

From there, we’ll look at all the offers on the table and find the ones we think suit you. If you like what we’ve found, just let us know and we’ll handle the majority of the paperwork and details. We’ll keep you 100% informed at every step, doing all the heavy lifting to get your new loan over the line.

After some advice?

Here at Lending People, we’re an independent and impartial source. We’re here to find great home loan deals on your behalf, and ensure you’re getting the best deal possible.

If you’d like some friendly advice, we’re here to help. Simply get in touch with one of our home loans team, and we’ll walk you through the details.

This blog is provided for general information purposes and is not a recommendation you enter into or exit any particular loans or insurance policy. Information on the website does not consider your particular circumstances, including your objectives, financial situation or needs. We recommend you seek advice from a financial adviser before taking any action as appropriate. The Lending People Limited (FSP240365) is a licensed financial advice provider and can provide advice on some types of personal loans. Find out more about The Lending People and how we may be able to help you.