This refinancing step-by-step guide will help you make better decision if you should go for that new mortgage loan
By: Hitesh Khan/
- What exit fees or penalties will be payable to your current lender – such as deferred establishment fees (DEF) – when you refinance? If you refinance to the same lender, the DEF is usually waived.
- What upfront costs do you have to pay to establish the new loan?
- a lower interest rate
- switch to a different product that your current lender won’t provide
- streamline all of your loans to one lender?
- Create a ‘shopping list’ of the features you want
- Meet with your mortgage broker to discuss options
- you’re refinancing with the same bank – in which case, you won’t need to provide as much paperwork
- your credit record has been impaired
- your income stream has changed
- your liabilities have changed
- you have no equity in your property
If you are refinancing to a new financier, you need to inform your current lender of your decision to refinance, so they can forward all required information to your new loan provider.
Step 6 of refinancing step-by-step guide: Pre-approval
The new lender will take between a few days and a few weeks to process your refinance application.
Your new lender will arrange to value your property or properties if you have more than one. Generally, the first valuation is free, but the lender will often charge $200–$300 for valuations on any additional properties.
Step 8 of refinancing step-by-step guide: Finance approval
At this point your lender will advise you in writing of your loan approval – this is generally called formal or unconditional finance approval. Your broker or lender will then instruct a lawyer to prepare the loan documents on their behalf.
Step 9 of refinancing step-by-step guide: Legally binding
The loan documents will be sent to your lawyer for review, and for you to sign. Alternatively, you can go over the contracts yourself, thoroughly reading the specifics about your individual mortgage arrangement.
Step 10 of refinancing step-by-step guide: Arranging settlement
Your new lender will arrange both settlement of your old loan with your previous home loan provider, and the establishment of your new loan. This involves exchange of titles and the bank’s registration of the mortgage over your property.
Step 11 of refinancing step-by-step guide: Draw down
You now have a brand new loan! You should receive details on how to manage your new loan, along with all of your new account information, within one week.
One important person who could better offer refinancing step-by-step guide is a mortgage broker. The refinancing process need not be a tedious and time consuming activity if you have the help of a trusted mortgage broker.
1. MORTGAGE BROKER TEACH YOU HOW TO BUY
The house buying process – from application, liaising with lawyers, compiling the documentation, and finally disbursement – can be a tedious, time consuming process.
Good mortgage brokers guide you through this process and teach you how to buy so that you don’t stress yourself out.
2. THEY ARE NOT TIED TO PARTICULAR LENDERS AND PRODUCTS
In Singapore, where we have a good number of local and foreign financial institutions, the choice of a lender and its packages can be mind boggling. In your house buying process, imagine having to compare over hundreds of different loan packages and wondering which is best for you. Even if you are a specialist in finance, it is not so straight forward as there are quite a few variables.
Most of the time, your property agent would also refer a contact at a bank to you. The point is, does the property agent know which bank package is good for you? Do they know how to calculate your loan affordability and interest costs? Do the property agents have the supporting home loan reports to assist you to find the right home loan packages and layout the facts for you?
This is where the mortgage broker comes in. Without any partiality, the mortgage broker can compare a range of products and lenders. This will help you save time and money, avoid confusion, and improve your chances of getting approved, as well.
3. SERVICES ARE USUALLY FREE
You heard right – the services of the mortgage brokers are usually free. That is, unless you have a complex situation or if you are only borrowing a small amount.
In case you are wondering why it is free to the borrower, it is because the lenders will pay the mortgage broker a distribution fee upon successful disbursement of loan.
iCompareloan also has tools such as the home loan comparison system, which compiles all the available loans that meet your search query, when you input the loan quantum, duration, housing type and whether the property is completed or under construction.
A simple property buyer home loan report can help you a lot in the house buying process.
4. YOU CAN BENEFIT FROM THEIR EXPERIENCE
Mortgage brokers usually have many years of experience in the credit and finance industry. This means they know how to get your application approved and how to get you the best home loan which fits your situation.
5. THEY CAN SPEED UP YOUR APPLICATION
Good mortgage brokers usually have very good relationships with lenders. This is good news for those who need their loans approved and disbursed with as little delay as possible, so that they can enjoy their new homes sooner. In most cases, the application turnaround time can be 2 – 3 days faster than going directly to the bank.
6. HOUSE BUYING PROCESS IS COMPLEX – GOOD MORTGAGE BROKERS MAKE IT EASY FOR YOU
A good mortgage broker will keep you updated on each stage of your home loan application until the loan is disbursed. They will liaise with the different parties like property agents, conveyancers and valuers, to make the process seamless and stress-free.
7. THEY SPECIALISE IN DIFFERENT TYPES OF LOANS
Borrowers with complex needs often get dismissed as ‘bad borrowers’. That’s because most banks do not have the skills to handle complex or the special requirements of the home buyers. A good mortgage broker, however, understands.
From property investing, to construction loans, to commercial properties, to bad credit loans, to unusual employment situation, to non-resident loans and non-traditional properties, there are many different types of loans. It actually makes good sense for someone who is looking to invest or someone with complex needs and goals, to use the services of a mortgage broker.
Engaging mortgage brokers is an excellent option especially if you don’t know much about the best home loans or the house buying process.
8. THEY CAN HELP YOU MAKE YOUR MORTGAGE WORK FOR YOU
The best home loans often come with different features which fit your unique financial needs. And from home loan with a redraw facility to interest-offset mortgage accounts, there are many different types of home loans with varying features which can help you better manage your mortgage over the long term. A good mortgage broker would be able to analyse your unique situation and recommend which home loan features are best for you.