How long does it take to refinance a home loan?
Refinancing a home loan can take anywhere between 1 and 6 weeks. The exact time will vary based on how quickly you provide your documents, the quality of your application, how fast the lender processes it, and if you meet all their requirements. It will also depend on whether you’re sticking with your current lender or switching to a new one.
Lenders sometimes ask for extra paperwork to verify your income, which can slow things down. Additionally, some lenders may struggle to keep up with a high volume of applications, particularly if they’re offering competitive loan products, like cashback offers.
Some banks offer “fast-track” or “rapid” refinancing to eligible borrowers, which can be completed in as little as 72 hours. You generally need to be switching from a particular bank and loan to qualify. Even then, each application is different, so there’s no guarantee on how long the refinance will take.
5 ways to speed up the refinancing process
1
Check your credit score and cut back on unnecessary spending
Check your credit score to spot any issues that might slow up your application if the lender discovered it. Your score will also show you where you rank, such as excellent, good, average, or below average. You can get your credit score and report for free online from Equifax and illion. Also, review your bank statements from the past 3 months for any red flags that could cause problems with your application. If needed, reduce any unnecessary spending.
2
Leverage competitor offers
Prepare all necessary documents before you apply for a new home loan. This includes proof of income, tax returns, bank statements, details about your current loan, and proof that the building is insured. You’ll usually need to provide two of your most recent payslips and up to six months of bank statements, to name only a few. Having these ready to go means you won’t have to search for them last minute, reducing the risk of forgetting any.
3
Understand lender processing times
Look for lenders with a reputation for fast processing and efficient service. Some lenders offer rapid refinancing options, which can shorten the overall time, but only certain refinances may qualify for that process. You can also check customer reviews to get a sense how fast the refinancing process was for customers with different lenders.
4
Submit a complete and accurate application
Double-check your application to ensure all information is correct and complete. Inaccurate or missing information can cause delays as lenders may need to request additional details. Most lenders and mortgage brokers will provide a checklist of what you need to include in your application.
5
Consider using a mortgage broker
A good mortgage broker can manage your home loan refinance for you. They handle the paperwork, negotiate with lenders, and guide you through each step, quickly addressing any issues that come up. If you choose to refinance with a mortgage broker, ask them which lenders typically process applications quicker than others.
Unlike a new home purchase, a refinance generally doesn't have a strict deadline for completion, so lenders might not prioritise your application. But there may still be reasons you want them to get a move on. A common example is if your current fixed rate term is ending soon and your loan will switch to a high default variable rate, unless your refinance goes through in time. In this case, either you or your mortgage broker may need to chase up the application with the lender.
What can delay your refinance application?
Here are some common factors that can delay refinancing:
Complexity of your financial situation
If you have a complex situation or can’t provide traditional proof of income (e.g. you’ve just started your own business and no longer have a steady salary), you’ll need to give additional documentation to verify that you can service the loan. For example, you might need a letter from your accountant confirming that you’re in a financial position to refinance.
Property valuation
When you refinance, the lender will arrange a property valuation, but there can sometimes be delays. This might happen because of high demand for valuations, limited availability of appraisers, or a volatile housing market.
Lender efficiency
Different lenders have different processing times, and how quickly they move can naturally affect the speed of your refinance. Delays can happen if there’s a backlog of applications or if there’s poor communication between the lender and other parties, like appraisers or title companies.
Documentation issues
Incomplete or inaccurate documentation can cause delays because the lender will need additional information or corrections. If the errors are minor, like misspelling your address, you’ll usually just need to provide the correct details. But if the errors are substantial, such as a major change in your financial situation (i.e. reduced income), the lender may need to reassess parts of your application, which could take more time.
Sean Callery, Editor of Money
“Lenders can be pretty slow, so give them a firm deadline, like saying you need the refinance wrapped up by a specific date. Also, make sure your bank, credit card, and loan statements are in good shape — no late payments or big expenses over the last 6 months. I’ve refinanced with and without a broker, and a broker will save you a lot of time, especially if your situation is complicated or you’re unsure about your eligibility.”
Sean Callery, Editor of Money
How long does it take to refinance with the same lender?
While refinancing with another lender can take up to 6 weeks, switching to a new home loan with the same lender will usually take less time. If you’re staying with your current bank, expect the refinance to take between 2 and 4 weeks. Again, the actual time it takes to refinance will depend on how strong your application is and how quickly the lender can process it.
Refinancing with your current lender is generally faster because they already have your information. If you switch to a new lender, you’ll need to provide all your details again, plus handle the transition from your old lender.
The refinancing timeline from start to finish
1. Research lenders and calculate your LVR (up to 2 days)
Start by comparing home loans from a range of lenders to find the best deals. Look at interest rates, loan terms, features, fees and refinancing costs to narrow down your options to mortgages that fit your needs and goals. To get a realistic idea of what rates you may qualify for, calculate your LVR to see how much equity you have in your home. For example, if you’ve had your current mortgage for years and your LVR has improved (i.e. from 75 to 60%), you’ll likely qualify for better rates and terms.
2. Choose a new loan (a few hours)
After comparing your options, choose the loan you want to refinance to. For instance, you might want a loan with certain features like an offset account or redraw facility to help you pay off your mortgage sooner. Or, you may simply want to switch to a lower rate.
3. Ask for a discharge form if switching to a new lender (a few hours)
If you’re refinancing with a new lender, you’ll need to ask your current bank for a discharge form, then fill in your details and return the form to the lender to authorise the refinance. Once your current lender knows you plan to switch, be ready for a call from the retention team, who may offer to match the new rate or terms you’ve found.
4. Submit an enquiry and complete your application (a few hours)
Once you’ve picked your new loan, submit an enquiry and complete your application with the new lender. You can usually do this online or through a broker if you’re using one. Expect a call from the new lender who will ask about your eligibility and request any documents needed for the refinance.
5. The lender will order a property valuation (2-3 days)
The lender will arrange for a property valuation to determine the current value of your home. This typically takes place once the lender has received your refinance application. You might need to provide extra details about your property, like any recent improvements you’ve made.
6. Obtain approval for your refinance (up to 2 weeks)
After the property valuation is done, the lender will review your application and make a decision. This includes checking your credit, financial situation and LVR. Depending on whether you’re refinancing with the same lender or switching to a new one, this can take up to 2 weeks.
7. Your old loan is paid off and the new one is settled (up to 2 weeks)
Finally, you’ll need to sign the discharge form to officially close your old loan. Once that’s done, the new loan will be finalised, and you’ll have a new account set up with your new lender. This means your old loan is paid off, and your new loan is active and ready to go.
