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Refinance requirements in real terms

3 min read | 10 Jun 2019

Refinance in real terms
Refinance in real terms

Can you refinance your home loan?

Yes! Refinancing is easier than you think, as long as you know what you need to do. Find out what you need to make a start, even if you’re on a fixed rate...yes, you can refinance a fixed rate mortgage if the numbers stack up! Let’s look at the must-knows.

The documents to sort

Refinancing is much like applying for a home loan to buy a property. And while every lender may do things a little differently, it’s these key documents you’ll be asked to provide.

  • Proof of ID - Driver’s licence, Australian passport or Medicare card

  • Proof of income – x2 - Most recent consecutive payslips (if self employed, you’re probably looking at tax assessment info dating back x2 years)

  • Additional income - Proof of any additional income you receive (like rental income, return on investments, Centrelink)

  • Current home loan statement - Use our document checklist to tick off what’s what when refinancing with Athena.

The numbers to provide

To help your lender understand the bigger picture about your finances and calculate your ability to repay the loan (a.k.a. serviceability), in addition to the above income information, you’ll be asked to disclose a few other details about your financial position.

  • Assets - like shares, investment property.

  • Liabilities - credit card limits, amounts outstanding on credit cards, other loans.

  • Living expenses - like regular bills and household costs.

Cut the credit cards

When lenders are looking at your debts to assess your serviceability, their eyes are on your total liabilities, even those you may not technically owe yet. With your credit card, for example, it’s not the current amount owing that goes into your application, it’s your total limit – or what you could owe if you maxed it out. So before you refinance, flip through your wallet and drop your card limits where you can. Even better, give them the flick.

Fitter, stronger bank statements

In addition to credit cards, lenders look at other expenses too, like the ins and outs on your bank statements. Practising good financial management and having low discretionary spend in at least the 3 months before you apply to refinance can really help the lender understand your ability to service the loan.

Your eligibility requirements

Like we said earlier, refinancing is pretty much an application for a home loan. All lenders have different eligibility criteria depending on their lending guidelines and requirements. If you’re interested in Athena – zero pressure – here’s the criteria to check:

  • You’re refinancing or buying an established property.

  • Borrow up to 80% of the value of your property.

  • At least one applicant is employed (PAYG) where you are employed by someone else.

  • Your property is in a capital city or major population centre.

  • You’re an Aust/NZ citizen or permanent resident living in Aus.

  • You have good credit history.

  • You have your own mobile and email.

See here for the full list.

Your borrowing power

The same rules apply if you’re refinancing with another lender or taking out a home loan for the first time – your borrowing power for the loan must be assessed. What everyone’s working towards here is making sure you can repay the loan over time (even ahead of time) without feeling stretched.

Can you refinance a fixed rate mortgage?

Yes, you sure can. We just want to flag a few things…

1. Check your lender’s fine print - If you have a fixed rate home loan and decide to leave your lender before your term ends, break costs may apply when you move. However, all’s not lost, as the money you could save on a new low rate could cancel out any losses. Head to our calculator to work out how much you could be saving if you switched to Athena.

2. Check your fixed rate term - Remember that fixed rates typically revert to a variable rate at the end of a fixed term – in many cases, at a higher variable rate. Set a reminder 3 months before your fixed rate term ends so you can start looking around.

Wherever you’re at, you have the power to change your situation. Find a lender who cares about you, not about their bottom line.

Athena will help you line your pockets, not the banks’.

See how much I can save with Athena

You’ve got nothing to lose except your home loan!

Start saving a whole lotta time and money

Athena acknowledges the traditional owners of the land on which we gather the Gadigal people of the Eora nation. We acknowledge that sovereignty was never ceded and respect their continued and continuing connection to this place.