What Are the Steps in the Refinance Process?

The refinance process has five main stages: a loan review, choosing a lender, lodging the application, valuation and approval, then settlement. Most borrowers can expect the whole thing to take several weeks, and a lot of that time is waiting on paperwork and lender checks, not work from you.

If you are a nurse or midwife juggling night shifts and a mortgage, you want to know what happens, when, and what it costs you. This article covers the steps in order, so you can decide whether to start.

What Are the Steps to Refinance a Home Loan?

Refinancing means taking out a new loan, usually with a different lender, to pay out your current one. The steps run in a set order, and each one feeds the next.

1. Review your current loan: rate, fees, features and balance.
2. Compare lenders and loan structures.
3. Lodge the application with your income and expense details.
4. The lender values the property and assesses your application.
5. Approval, then settlement, where the new lender pays out the old loan.

A mortgage broker for nurses can handle steps two to five for you, which helps when your days are taken up by shifts.

How Do You Know If It Is Worth Refinancing?

It is worth refinancing when the saving from a lower rate or more suitable features is bigger than the cost of switching. Switching can involve discharge fees from your old lender, application fees from the new one, and break costs if you are on a fixed rate.

A loan health check puts your current rate, fees and features side by side with what is available. If you are coming off a fixed rate, the fixed rate expiry page explains your options before the term ends. Many lenders move borrowers onto a variable rate when a fixed term finishes, and that rate may not suit you.

The main trade-off is that a lower rate can come with fewer features, and a new loan term can restart your repayment clock. Check both before you commit.

Illustrative Example: What a Lower Rate Does to Repayments

A small drop in rate changes repayments by a real amount each month, but the result depends on your loan size, term and the new rate offered. As an example, consider a midwife with a $600,000 balance and 25 years left. At an illustrative rate of 6.75% p.a., principal and interest repayments come to roughly $4,145 a month.

Suppose a review shows she could move to a loan at an illustrative 6.25% p.a. with the same 25-year term. Repayments fall to roughly $3,958 a month, a difference of about $187. Over a year that is about $2,240 she can put towards her offset, her roster-related costs or her savings.

She does need to weigh up any discharge and application fees against that saving. If those fees came to $800, she would recover them in about four to five months. Her actual result would depend on the rates available to her and her circumstances. You can test your own numbers with a repayment calculator.

What Do Lenders Need From Nurses and Midwives to Approve a Refinance?

Lenders need proof of your income, your living expenses, your existing debts and the value of your property. For nurses and midwives, income is often where the detail matters, because shift loadings, overtime and allowances can make up part of your pay.

How a lender treats that extra income varies, as lenders treat shift loadings, overtime and allowances differently. A broker who works with nurses regularly knows which lenders to approach first and how to present your payslips. If you are unsure how much a lender might let you borrow, the borrowing capacity page is a good starting point.

Expect the lender to also ask about your loan amount, other loans and credit cards. Reducing or closing credit card limits you do not use can improve your borrowing capacity, because lenders generally assess the card limit rather than the balance.

Can You Refinance to Release Equity?

Yes, you may be able to borrow more when you refinance if your property has enough equity, which is the gap between its value and what you owe. This depends on the lender's approval, its valuation and its assessment of whether you can afford the larger loan.

People use released equity for renovations, a deposit on an investment or to consolidate other debts. Borrowing more means a bigger loan and more interest over time, and if the money goes to investing, the investment can lose value. The equity release loans for nurses page covers how this works, and the home loan refinancing for nurses page sets out the wider refinance options.

Some lenders also place limits on how much equity you can access when your loan-to-value ratio is high, so the amount you can release may be smaller than you expect.

How Long Does the Refinance Process Take?

Refinancing commonly takes a few weeks from application to settlement, though the timeframe depends on the lender, how quickly the valuation is done and how complete your documents are. Delays usually come from missing payslips, unclear statements or a valuation that comes in lower than expected.

If your fixed rate is ending, start well before the end date. That gives you room if the lender asks for extra information.

To keep things moving on a busy roster, send your documents early and agree on the best times for your broker to call you. Some new lenders also offer cashback for refinancing, but these often have minimum loan sizes and conditions, so read the fine print.

Refinancing Before Your Next Purchase

If you plan to buy again, a refinance can tidy up your current loan first. A broker can compare options for your next home, and the home loans for nurses page covers lending built around shift income. If you are still renting and saving, the first home buyer loans for nurses guide is the place to begin.

Whether you want to cut repayments, move off a fixed rate or release equity, the first step is a conversation about your actual loan. Call one of our team or book an appointment at a time that works for you, and we will review your loan and walk you through the options.

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