When you're serving or have served in the Australian Defence Force, refinancing your home loan can open doors to improved financial outcomes. Whether you're looking at accessing a lower interest rate, releasing equity in your property, or wanting to consolidate debts, understanding the approval process helps you prepare for what lies ahead.
Why ADF Members Consider Refinancing
Many Defence personnel find themselves in situations where refinancing makes financial sense. Your circumstances might include:
• Your fixed rate period ending and you want to lock in current rates
• Needing to release equity to buy the next property
• Wanting to change your loan term to reduce loan repayments
• Seeking to consolidate debts into one manageable payment
• Finding better loan options than your current arrangement
As Defence members, you often have access to special lender policies that civilian borrowers don't qualify for. Finance & Mortgage Brokers who specialise in Defence lending can help you access loan options from banks and lenders across Australia that understand military service.
The Refinancing Approval Process Explained
The refinancing process involves several key stages that lenders use to assess your application:
1. Initial Assessment
Lenders will review your current financial situation, including your income, expenses, and existing loan amount. For ADF members, this includes understanding deployment allowances, shift penalties, and other military-specific income streams.
2. Documentation Requirements
You'll need to provide recent bank statements, payslips, and details about your current loan. Defence personnel often have unique documentation requirements, which experienced brokers understand well.
3. Property Valuation
The lender will arrange a valuation of your property to determine its current market value. This affects how much equity you can access and influences the loan amount you qualify for.
4. Credit Assessment
Your credit history and current debts will be evaluated. Military service members often have stable employment histories, which can work in their favour during this assessment.
5. Final Approval
Once all criteria are met, the lender provides formal approval with specific terms and conditions.
Understanding Interest Rate Options
During the approval process, you'll need to decide between different interest rate structures:
Variable Interest Rate: Your rate can move up or down based on market conditions and lender decisions. This option often provides more flexibility with extra repayments and redraw facilities.
Fixed Interest Rate: Your rate remains unchanged for a set period, typically one to five years. This provides certainty with your repayments during the fixed period.
Many borrowers choose a combination of both, splitting their loan between variable and fixed portions.
Special Considerations for Defence Members
ADF personnel have unique circumstances that can affect the refinancing approval process:
• Deployment income may be treated differently by various lenders
• Posting locations can impact property strategies
• Military housing allowances may influence borrowing capacity
• Some lenders offer preferential rates for Defence personnel
Working with brokers who understand these nuances can help you check eligibility for special lender policies that might not be widely advertised.
Preparing for Your Application
To help ensure a smooth application process:
- Gather all required documentation early
- Review your current loan terms and identify what you want to change
- Consider your long-term financial goals
- Understand the costs involved in refinancing
- Research different lenders' policies regarding Defence personnel
Timeline Expectations
The refinancing approval process typically takes 2-6 weeks, depending on:
• Complexity of your financial situation
• Lender processing times
• How quickly you can provide required documentation
• Whether a property valuation is needed
Having all documentation ready can help accelerate the process.
Making the Right Choice
Refinancing isn't always the right solution for everyone. Consider factors like:
• Exit fees from your current loan
• Application costs for the new loan
• Whether the interest rate difference justifies the switch
• How long you plan to keep the property
A streamlined application process with the right broker can help you evaluate these factors properly.
Refinancing can provide significant benefits for ADF members, from accessing improved interest rates to releasing equity for investment opportunities. Understanding the approval process helps you prepare effectively and increases your chances of securing favourable terms.
Call one of our team or book an appointment at a time that works for you to discuss your refinancing options and how we can help you through the approval process.
