Assessing a Refinance Application
Refinance assessments need to balance the commercial case with the practical considerations of break costs, upfront fees, and loan structure. A clean assessment gives the client confidence the change is worth making.
Understanding the client motivation
Clients refinance for different reasons. Rate savings, cash out for renovations, debt consolidation, or changing loan features. Understand the primary motivation before running the assessment because it shapes which lenders and products suit.
Calculating break costs and fees
If any part of the existing loan is fixed, contact the current lender for an indicative break cost quote. Add discharge fees, new application fees, and any LMI top up if the LVR has increased. Only once the full cost is known can the commercial case be assessed.
Presenting the commercial case
Model the savings over a clear period, often three to five years, and compare them against the cost of switching. Show the client the break even point and the total interest saving net of fees. A good model lets the client see whether the refinance is worth doing now or better deferred.
Key takeaways
- ✓Understand the client motivation before choosing products
- ✓Calculate break costs and all switching fees upfront
- ✓Present a clear commercial case with break even analysis
- ✓Consider loan features alongside rate savings
How QualifyMate helps
QualifyMate reads existing home loan statements alongside income, liability, and bank statement data, giving brokers a clean view of the borrower current position before they model the refinance.
Key terms
Comparison Rate
A rate that combines the advertised interest rate with most standard fees to give borrowers a clearer picture of the true cost of a loan.
Fixed Rate Loan
A home loan where the interest rate is locked in for a set period, typically between one and five years.
Offset Account
A transaction account linked to a home loan where the balance reduces the loan principal used to calculate daily interest.
Related guides
Reviewing Existing Home Loan Statements
How to review existing home loan statements for refinance and top up applications. Balance, rate, repayment type, and redraw checks.
Reviewing Council Rates Notices for Refinance Files
How to read council rates notices for refinance and equity release applications. Ownership, rates arrears, and property details.
Reading Bank Statements for Home Loan Applications
How to review Australian bank statements for mortgage applications. Salary credits, expense patterns, undisclosed liabilities, and red flags.
Preparing Submission Notes for Home Loan Applications
How to prepare clean submission notes for Australian home loan applications. Structure, tone, and the information assessors need.
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