What are the eligibility criteria?
If you’ve wondered if you can refinance your home loan with Great Southern Bank, the simple answer is that you can. But there are eligibility criteria you’ll have to meet.
You must be:
- at least 18 years old.
- an Australian citizen or a permanent resident of Australia.
While not mandatory, it’s ideal if you have more than 20 per cent of equity in the home. This can help you avoid paying Lenders Mortgage Insurance (LMI), which can be costly to pay.
And if you’re planning to refinance with a partner – like a spouse, family member or friend – then you will both need to be present when you apply. This includes if you apply online.
What documents do you need?
There are certain documents you’ll need for the refinancing process – getting them sorted out early can go a long way to keep your application on track. Before you visit your lender in person or apply online, here are some documents to collect first:
- Identification documents, like your driver’s licence or passport.
- Proof of income and employment, like a recent payslip.
You’ll also need to outline your financial liabilities and expenses. You can do this verbally by telling the new lender roughly how much you spend each month in certain categories, such as bills.
If you have a budget, then you can use this as a guide and to make this part easier. And when it comes to your financial liabilities, your lender will verify what you’ve said against a credit report.
What do lenders look for in a refinancing application?
Lenders will be keeping their eye out for a few positive signs on your application to boost your chance of refinancing success.
Good credit score
Having a good credit score shows the lender that you’ve managed your current and past debts well and have responsible credit behaviour.
Your reason for refinancing
When you know why you want to refinance, and you share that with your lender, they can help you find the best loan possible. For example, if your goal is to consolidate your debt and have clever features to pay it off, then your lender can find a suitable home loan to meet those needs.
Your loan to value ratio (LVR)
Your loan-to-value (LVR) ratio is a percentage that shows how much money you want to borrow compared to the value of your home. In the context of refinancing, having a LVR of less than 80 per cent is a positive sign that you can successfully refinance. The lower your LVR, the lower the risk your new loan is to the lender.
How can you be ready to refinance before applying?
If you’re ready to take the plunge and refinance your home loan, then there are some things you can do to be in the best position possible before applying.
Understand your current financial situation
If your financial situation has changed between when you first took out the loan and when you decide to refinance, it might affect how much a lender will loan you. So, knowing where you’re at with your money currently can help you become refinance-ready.
Are you still earning enough income to pay off your loan? Have you taken out other loans that you’ll need to factor in? Answering these questions and painting a picture of your finances can help you decide if it’s the right time to refinance or not.
Check your borrowing power
Understanding your borrowing power can give you an indication of how much a lender might loan to you in case you want to cash out the equity at the same time. By checking how much you can borrow, you can manage your expectations.
We have a borrowing calculator that you can use to help you estimate your borrowing power based on a few factors, such as your income, expenses and other loans you might have.
Tidy up your finances
Getting on top of your finances can help make the refinancing process smoother. One way to get ahead is to make a budget to factor in the costs of switching loans, which can catch you off guard if you’re not prepared for them.
Another thing you can do is manage your debt, so you have a few less loans in the basket when you refinance. You can also consolidate your debt as part of refinancing – there are heaps of options when it comes to managing your credit while refinancing.