Loan refinancing is a suitable option for many. It helps secure lower interest rates, provides more flexibility, and consolidates debt.
However, it can often be lengthy and time-consuming, taking weeks while you wait for your current loan to be discharged.
Fortunately, a fast or rapid refinance can help you reach the finish line quicker than expected.
Fast refinancing is a simplified refinance solution that is quicker and more straightforward than the conventional method.
It lets you cut your current lender out of the picture to refinance your home loan more efficiently. Rather than waiting for the title to your property, lenders offer fast refinance to release surplus funds to your current loan account to close it immediately.
If you qualify for a fast refinance, you don’t have to settle the old loan account of the outgoing lender. Furthermore, the refinance generally occurs within days rather than weeks without surcharges.
The most common method for fast refinancing in Australia is with FASTRefi®.
FASTRefi® is a unique process that allows a refinance to take place quickly once the loan documents have been signed. It eliminates the need to arrange a settlement with the Outgoing Financial Institution (OFI).
With FASTRefi®, lenders can use the borrower’s current account balances and statements to arrive at an estimated figure for paying out the borrower’s loan balance.
FASTRefi® benefits home loan borrowers in many ways. This includes faster settlement, quicker access to new loan terms and funds, no extra fees, greater certainty about when the loan will be activated and interest savings when refinancing at a lower rate.
Lenders who provide fast refinance commonly do not charge customers for the process.
Above and over saving money, you will also keep stress at bay. Fast refinancing translates to reduced work for you as your new lender will take care of most of the paperwork to get your refinancing in order.
Here are a few ways a rapid refinance can help you:
A fast refinance typically takes around 72 hours for completion. Meanwhile, a typical refinancing process can take between 4 to 6 weeks from application submission to the payout time. Throughout this duration, your loan application is continuously assessed, valued, and made to undergo a formal documentation process.
The ability to rapidly refinance a loan can prove invaluable. However, there are many considerations involved. Let us take a look at the pros and cons of fast refinancing.
Transitioning to a rapid refinance can be immensely helpful, especially if the loan is secured to buy a property at short notice. A rapid refinance does away with the time delays associated with conventional refinances and disburses the loan amount faster.
It also offers the assurance of when your new loan will get active.
In many cases, you might need surplus funds to take care of an urgent financial-related situation. A rapid refinance can help you access the required funds at no additional cost.
Typically, lenders do not charge any additional settlement process fees. Nonetheless, standard fees and charges will apply, including exit, refinance, additional settlement fees, etc.
In addition to accessing surplus funds at short notice, fast refinance diminishes contact with your outgoing lender since your new lender is the one responsible for settling your loan.
Your new lender takes care of the necessary paperwork and pays out the balance on your existing loan, meaning less hassle.
If your current home loan has any outstanding debts or you wish to capitalise on cashback refinance rebates earlier, a fast refinance can help you sort out your financial affairs. If you had initially obtained a poor credit mortgage, you could also refinance to a better loan once your credits are in order.
Some lending institutions that provide rapid refinance keep up to $2000-$3000 of the debtor’s funds in a contingency fund for a period of four weeks to cover any expenses that may emerge during the payout process.
After this duration, the lending institution balances out the debtor’s existing loan payment and reimburses this money back to them.
However, even though the money might be repaid later, it is still a significant sum you may not be able to part with. So, do your due diligence in advance.
While it might not cost you a dollar when your loan is moved to a new lender, a “zero-cost” fast refinance does not exist.
Numerous home loan refinancing costs might add to your new loan. Take, for instance, the settlement of the closing costs and fees associated with fast refinancing. While you can opt not to pay the settlement fees, you may have to bear them one way or another.
When your new lender pays the settlement costs to the outgoing lender, they will charge you a slightly higher rate of interest to cover up for these payout charges.
While lending criteria vary, many lenders do not offer fast refinance on fixed-rate loans, reverse mortgages, lines of credit, bridging loans etc. There may also be minimum loan amount requirements that further restrict eligibility.
Mortgage borrowers can capitalise on their chances to lower the cost of their monthly payments by going for a mortgage refinance. Here are the lenders if you are looking to fast refinance your existing mortgage:
Commonwealth Bank offers a FASTRefi® refinance option for home loans from select lenders. Eligible borrowers can choose from the bank’s variable and fixed-rate home loan range. While standard fees apply, no additional FASTRefi® settlement process fees are applicable.
ANZ provides a rapid refinance service that was just introduced earlier this year. With this feature, ANZ only requires eligible customers to provide two documents to access funds as soon as 72 hours after the time of application.
Westpac offers a Priority Refinance® option to eligible borrowers with a straightforward payout process.
The payout comprises the current loan balance plus the current month’s accrued interest, the interest payment amount for one month and the discharge and other fees amounting to $850.
St. George’s FASTRefi® is a highly streamlined refinancing solution that allows you to access your new loan in a matter of days. Eligible borrowers can access most of the residential fixed and variable rate home loans and investment property loans leveraging the FastRefi® option.
Much like Westpac, they also charge the same settlement figure, thus making the loan borrowing process seamless. Moreover, the buffer is not a fee and is repaid after settlement.
Eligible borrowers looking to refinance their variable, line of credit or fixed rate loan can access Bank of Melbourne’s FASTRefi®
Their settlement figure comprises $850 for each refinanced loan, a month’s accrued interest, and one month’s interest-only repayment on each loan.
Home loan borrowers who meet the eligibility criteria can refinance their existing variable, line of credit or fixed rate loan through FASTRefi®. The bank will refinance the loan quickly before receiving the title
Their settlement figure comprises $850 for each refinanced loan, a month’s accrued interest, and one month’s interest-only repayment on each loan.
FASTRefi® by Suncorp Bank enables the funding of your eligible home loan without a booked settlement. This helps you access your new loan in a few days in a straightforward process, with fees similar to standard refinances.
If your potential new lender refuses to provide you with this service, it could be due to your unique conditions. It might indicate a concern with the title to your investment property or a change in lender or type of loan.
Nevertheless, you can take measures to expedite your loan refinance application:
To refinance your home loan, you’ll have to satisfy the lending criteria set by your new lender. These criteria can be fulfilled by providing your new credit provider with the necessary documents.
Details required will include your existing loan, including the outstanding loan amount. You will also have to procure bank statements for the last three months.
Here’s a quick rundown of documents that borrowers need to provide for a new loan:
To qualify for a fast refinance, you’ll also want to ensure your property’s title insurance doesn’t have any restrictions.
Ensure that it does not have any other debt secured by it, such as a business loan. Also, if you’re in a fixed-rate loan with your old loan provider, it’s improbable that you’ll be eligible for a fast refinance within the fixed-rate term.
The refinance process works almost the same way, even when opting for fast refinance. However, there are some unique considerations to take care of. Let us take a look at the step-by-step process for a fast refinance:
Fill in your home loan application form and provide the required documentation as you would usually to your broker or lender. Your loan application will undergo an assessment, and if it passes all sanitary checks by the creditor, they will send you the loan documentation pack.
The loan documentation pack that your creditor sends you should include the following two Fast Refinance forms:
You must fill in these two forms accurately and to the best of your knowledge with your other loan documents (if any). Each of these forms comes with instructions to assist you in filling them accurately.
You should disclose all your ongoing loans, including guarantees, business, and investment loans. Fill the forms accurately, as incorrect information may cause delays from the creditor’s end, rendering the essence of fast refinances meaningless.
Your lender might also contact you to update your updated balances in case of delays.
Once your lender completes the verification process and feels everything is in order, they will activate your new loan.
In the background, to ensure that your old loan is repaid in full, your lender will calculate the balance to cover the remaining payment against your old loan, the accrued interest and fees.
Once the new lender makes the payment to your outgoing lender, your old loan is annulled, and your new loan is activated. You can now start enjoying the features of your new loan and access extra funds, if applicable.
The last step is to pay out the line of credit with your previous lender. At this stage, your new lender will transfer the loan from your previous lender to themselves.
Once the payout is final, your outgoing lender will move any remaining funds to your specified account. The payout with your old lender might take a week to complete.
At this stage, take stock of all debits linked to your existing loan account and cancel them. Your new lender will likely calculate the payout figure to pay out your old loan. Do not stop making your equated repayments until you say otherwise.
The approximated settlement sum will appear more significant than your present loan balance to cover all charges and interest accrued until the settlement date.
You can verify the annulled accounts from the internet banking service of your old lender to see the closing interest charges and costs for your old loan.
There may be times when you might want to refinance your existing loans for a short-term goal. In such cases, rapid refinance can not only allow you to secure the funds early but also provide you with potential benefits for the long-term, provided you play your cards right.
There are many lenders that offer rapid refinance services. If you are in a dilemma over which lender is right for you, visit the Joust Marketplace to find the best lenders for your requirement.
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