5 tips to reduce stress when refinancing your loan

By on April 11, 2022 0

Do your research, be realistic, find a fast online lender, and take the stress out of refinancing.

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Refinancing your home loan often takes hours of work and it’s rarely a walk in the park either – especially if you’re under pressure to refinance.

Perhaps you are nearing the end of your fixed rate period and your current lender has offered an astronomical replacement. Or maybe your financial situation has changed and you suddenly need more manageable repayments.

Whatever the reason, you’ll need to find a new lender, gather your documents, submit an application, and wait for their approval. In other words, say hello to a world of stress and a few weeks of sleepless nights.

Or not. In fact, there are ways to reduce or even eliminate the stress associated with refinancing. A well-organized borrower taking advantage of fast digital mortgages and real-time approval processing can speed things up and eliminate anxiety altogether.

Here’s what you need to do.

1. Check your credit score (even if you think you’re fine)

Refinancers probably haven’t checked their credit score in a while, but it’s one of the first things your new lender will do. If you’ve been paying off your mortgage for years, you probably have nothing to worry about, but sometimes things go wrong without you even realizing it.

If someone has accumulated large debts on your credit card, or if there is an error in your credit report, catching it before refinancing will make the whole process easier.

2. Examine your capital position

Your equity is the value of your home minus outstanding debt. To estimate your capital, all you need to do is:

  1. Determine the current value of your property. Estimate the current price you could get for your home if you sold it today.
  2. Determine how much you have left to repay on your mortgage. Check your latest home loan statement.
  3. Subtract your remaining loan debt from the estimated value. This number is your equity. For example, if you think your property is worth $700,000 now and you have $200,000 left on your home loan, you have $500,000 in equity.

Having plenty of equity makes refinancing easier. The more assets you own, the smaller your debt and the less risk you have for a lender. And if you’re refinancing to borrow a little more money, having equity is key.

3. Determine exactly what you need from the new loan

Before you start applying for a new loan, identify the type of home loan you’re looking for and the features you need.

For many borrowers, an offset account is essential and a competitive interest rate is always important. You also need to decide whether you want a fixed interest rate or a variable interest rate.

Deciding on this in advance makes it easier to find a suitable loan and to change more quickly.

4. Opt for a faster lender

Every lender is different and some process applications much faster than others. One way to have a stress-free refinance is to look at an online lender that promises a fast home loan approval process.

Nano is a good example of such a lender. If you have all your financial details ready and meet the criteria, Nano can approve your loan in minutes rather than days or weeks.

It can do this because it has a sophisticated digital platform designed to speed up the process. Simply put, it has automated the process so you can get approvals quickly.

You can even verify your identity online through your phone and by taking a photo of your ID through your phone. You also don’t need to provide any papers, so don’t worry about finding all your payslips or sorting through your bank statements. Instead, you can securely provide your bank details and Nano can quickly analyze your income and spending habits.

5. Know your limits

You will always find it easier to refinance if you try to borrow within your means. This means calculating your capital, how much you want to borrow, and estimating your borrowing power.

If you try to borrow more than you can afford, your application will likely be rejected.