The 10 Questions to Ask Your Broker Before Refinancing

Are you looking to finance your next home or renovation project? Refinancing can be a great option to access equity in your existing home to free up cash to fund your next property goal. If this is your first time refinancing, you might be wondering what is involved in refinancing? Or, should you go directly to a lender or use a mortgage broker to refinance?

A professional mortgage broker is legally bound to work in your best interests when it comes to all things finance. At Pivotal Financial we are experts in helping customers unlock their equity through refinancing.

Here are the top 10 questions you should ask your mortgage broker before refinancing so you know whether it’s the right option for you.

1. What are your qualifications?

All professional mortgage brokers should have the correct credentials for you to work with them. Don’t get caught out with an unlicensed broker. You are welcome to ask your broker the following questions and they should have no hesitation in answering.

Are you a licensed member of the Mortgage Finance Association of Australia?
Are you a member of the Finance Brokers Association of Australia?
Do you hold a Certificate IV in Finance and Mortgage Broking?

2. How will you decide which option is best for me?

Mortgage brokers worth your time should be able to explain the different types of loans and lenders available when you are looking to refinance and why they think they're suitable for you and your personal situation.

They should also be aware of the pros and cons of each option. You can also ask your broker what their process is for ruling out other lenders.

3. Will I qualify for refinancing?

When refinancing, it is similar to getting finance the first time. Your broker can advise of your borrowing capacity and any potential limitations to getting approved for a refinance such as low credit score.

In addition to this, they will help you organise a valuation so you can understand exactly how much equity you have in your current home you can access through a refinance.

4. Can you tell me more about your panel of lenders?

Any mortgage broker worth their salt has access to a large and varied network of lenders. It pays to know who and how many are on their panel of lenders so you can be confident about your broker’s capacity to scope and find the best loan package for your refinance needs.

Sometimes, refinancing with your existing lender may come out to be the best option, and other times your broker will explain why another lender with a different home loan product may be better suited.

5. What information will be required of me to apply for a refinance?

Your broker must have a printed checklist of documents that you need to comply with when refinancing, just like applying for finance any other time. This helps you keep track of what you have to get sorted and start planning early. The checklist usually includes proof of identity, bills, proof of income or tax returns and other documents required for loan applications.

6. Should I refinance with a fixed or variable interest rate?

The interest rate available on a refinance package is a key consideration for many people looking to get a better deal. A good mortgage broker will take you through all the options according to your goals and can explain what interest rates paired with any fees on a loan will mean for your repayments.

They can also explain to you the pros and cons of getting a fixed or variable home loan. A fixed home loan rate can be ideal if you want security and stability in your repayments for a fixed term (usually 1-5 years), while a variable home loan rate can be best for taking advantage of cash-rate movements.

Your broker can walk you through all the options available so you know you are making the right refinancing decisions for your personal circumstances.

7. Can you walk me through the process of securing a loan when refinancing?

Your broker should be able to easily explain to you the different stages of refinancing, from compiling paperwork to valuing your current home and submitting your application through to approval and settlement on the new loan.

8. Can I access the equity in my home, and how much will it be?

Borrowers who plan on investing in a property or house renovation usually refinance to cash out their equity. Your broker can tell you if there is enough equity in your home for you to draw funds from. This will depend on how much you owe on your mortgage and the property value.

9. Which loan features should I look out for?

If you have an excellent credit score and are consistent with your repayments, you may be able to take advantage of certain loan features that can help you save on interest or manage your finances better. Such loan features may include flexible repayments, redraw, and offset.

10. Is it a good time for me to refinance?

Refinancing is a major financial undertaking, so make sure to express any misgivings you may have with your broker regarding this. They will help you:

determine whether or not it is a good time to refinance;
figure out how refinancing can suit your specific goals and improve your situation, both in the short and long term;
consolidate existing debts like credit cards or car loans into a single monthly payment; and
get a customised financed solution for you based on their experience and comprehension of products and policies — all with your best interests at heart.

Work With Experts

Understanding your refinancing options can take a lot of legwork and resources. It is best to work with a mortgage professional who can assess and compare options that suit your circumstance from multiple lenders for you.

The expert mortgage brokers from Pivotal Financial will help you save time by negotiating on your behalf and helping you access special deals so you can get the best interest rate available for your personal situation.

Call us on 07 3007 9088 or message our team to get started.