Should You Use a Refinance Broker?

Refinancing is a great option for anyone looking for better home loan terms. It helps you unlock benefits or features that you don’t yet have with your current mortgage, including:

• Lower interest rates.

• Reduced monthly repayments.

• Switching to a fixed-rate home loan, etc.

If you’re trying to refinance your home loan, you’ll have two ways to go about it: through a mortgage refinance broker or applying directly to a lender.

Before you commit, it’s vital to weigh your options to come to the best decision. Refinance brokers offer a myriad of benefits over what you could get when applying to a lender directly.

Let’s cover all about that in detail today.

What Is a Mortgage Refinance Broker in Australia?

A refinance broker acts as a middleman between a borrower and a lender. 

They usually have partnerships with multiple lenders. That means when you want to access various lenders and offers in less time and effort, a mortgage refinance broker is who you’d approach.

Here at Koalify, we have the top 30+ lending partners in Australia that can help you save money by refinancing your current home loan. 

We bridge the gap between one borrower and multiple lenders. So, rather than approaching different lenders yourself, you could just approach a refinance broker like us to access the offers those lenders provide in a fraction of the time.

We’ve saved thousands of dollars for homeowners. Want to be one of them? Let us help you find the right refinance offer today.

Refinance Broker vs. Banks: 7 Advantages of Having a Broker

You may want to go through a broker for your refinancing needs for a few reasons. They offer a significant advantage over lenders. Here are a few:

1. Access to a wide range of lenders: You can quickly get offers from multiple lenders that could provide you with favourable home loan terms. This gives you more options to choose from while you only get one offer from one lender.

2. Guaranteed favourable terms:  Brokers curate the available offers for you, ensuring the offers you receive in the end are all beneficial and aligned with your preferences. However, if you apply to a bank directly, their offer may or may not suit your needs.

3. Expert, unbiased advice: Licensed refinance brokers provide unbiased advice with their industry expertise, whereas banks are limited to their own products.

4. Time & cost efficiency: Since brokers give you access to multiple lenders, multiple offers, and expert guidance all in one place, it ultimately saves you time, money, and effort. 

5. Better rates and terms: Brokers hold the added advantage of leveraging their relationships and industry knowledge to secure lower rates or more favourable terms for you.

6. Personalised service: Refinance brokers take the time to understand your unique financial situation and goals. They use this information to find the most suitable offers for you on the market.

7. Helps a lot with the paperwork: They also handle most of the refinancing process for you, saving you from the tedious process of refinancing. 

Essentially, refinance brokers take away many of the headaches you would otherwise go through by approaching lenders directly.

To add to these benefits, most refinance brokers provide services to borrowers free of charge. If you can find the right broker, they’ll act in your best interest to help you find refinance opportunities that suit your preferences.

Do Refinance Brokers Have to Act in Your Best Interest?

Yes, and they must.

The Australian Securities and Investments Commission (ASIC) mandates that all mortgage refinancing brokers in Australia must comply with the best interests obligations as set out in the National Consumer Credit Protection Act 2009 (National Credit Act).

Do They Offer Better Rates?

Mortgage refinance brokers are in a better position than you to negotiate better terms with lenders by leveraging their partnering relationships.

However, this does not guarantee that you will get better rates with a refinance broker, as the lenders themselves ultimately decide the loan terms.

Do You Need a Broker to Refinance?

No, you could search and apply to lenders directly yourself.

Even if you initially went through a broker to get refinance offers, you could still leave your broker and apply directly to any of the offers the broker curated for you.

But keep in mind that the lender may change the terms of the offer you got through the broker if you cut them midway, especially if the offer was negotiated for better terms by the broker on your behalf.

How Is a Mortgage Refinance Broker Paid?

Most refinance brokers in Australia do not charge borrowers any brokerage or commission fees. 

Instead, they earn commissions from lenders, paid as a set percentage of the total loan amount they helped to settle.

Commission to brokers is paid with an amount upfront when they close a refinancing deal and as trail commissions that the lender pays annually for the life of the refinanced loan.

At Koalify, our expert mortgage broker services come at no cost to the applicant. Our remuneration structure is set by the lenders to ensure impartiality; we are committed to recommending the best possible mortgage options based on your unique financial situation and needs, not based on the commissions we receive.

This approach guarantees that our advice is always aligned with your best interests, providing you with a wide range of choices and unbiased guidance to secure the right loan for you.

Is It Cheaper to Refinance Without a Broker?

Most lenders in Australia do not charge borrowers in any way, so refinancing with or without a broker costs you the same anyway.

Lenders pay brokers commissions. However, this doesn’t mean lenders will offer you costlier plans or higher interest rates either. 

If anything, a refinance broker can leverage their relationship with the lender to negotiate lower fees and interest rates on your behalf.

That means even in the worst-case scenario, you should only benefit from a broker's added expertise and help while still paying the same as if you applied to a lender directly.

The Process of Refinancing With a Broker

Everything starts with your initial consultation, where you’ll share your needs, financial situation, and goals.

This is followed by the submission of any necessary documentation. Your refinance broker will inform you of what’s needed, but you can expect to submit these:

• Existing mortgage details.

• Recent payslips.

• Tax returns, etc.

The broker will then asses your credit score and share all your details with their lending partners. When the offers come in, the broker will compare the options based on your goals and present the most suitable offers to you.

Once you choose an offer, the broker will submit the refinance application on your behalf and liaise with the lender. The broker will handle most of the paperwork, except for some essential parts of the application that require your involvement.

5 Important Questions to Ask a Mortgage Refinance Broker

It’s good practice to keep a few important questions handy to ask your refinance broker. See if you can get satisfactory answers to these basic questions from your broker before you finalise your refinance with them.

Consider that you’ve approached the right lender if you get positive answers on these.

1. How Many Partner Lenders Do They Have?

Although there’s no minimum or maximum number of lenders a refinance broker should partner with, it is generally better for you to choose a lender that has the most number of partners.

The bigger the number of partner lenders, the more refinancing offers you can choose from.

2. What Are Their Fees and Commissions?

As we already mentioned, most refinance brokers in Australia do not charge you, the borrower. However, it is still a good practice to ask them about any fees or commissions involved, just to make sure you didn’t approach the small number of brokers that do charge the borrowers.

3. What’s the Comparison Rate of the New Loan?

The comparison rate estimates how much a loan would cost a borrower each year. It is calculated based on all costs involved, including the interest and any other rates or fees.

4. How Long Does the Refinancing Process Take?

The timeline varies by lender and the complexity of your application, but the entire process to refinance your home loan typically takes 1-6 weeks.

That’s the time required by the lender alone. When you go through a refinance broker, consider adding in the time it takes on their end as well. That, too, varies by broker, so you should ask them for the estimated timeline to get an idea of the length of the entire process.

5. Is LMI Involved?

Lenders Mortgage Insurance (LMI) is required even in refinancing if you borrow over 80% of your home’s value.

Check with your broker to see if you are required to pay LMI on the offers of your preference. If so, ask them what the best possible workaround would be to avoid paying it.

Lenders offer LMI waivers for teachers and other select professionals in Australia. LMI waivers provide up to 90% LVR for people in such professions, so that’s a great way to avoid paying LMI without bringing down your LVR.

Key Considerations Before Refinancing With a Broker

Before you decide to proceed with a refinance broker, it’s vital to consider these important items to make sure you’re going to work things out with the right broker.

Are They Licensed?

It is mandatory for all mortgage refinancing brokers operating in Australia to be licensed. And verifying their license to operate is the only way to ensure you’re not being scammed.

Before meeting with a broker, search for them on ASIC Connect’s Professional Registers to check if they are licenced.

Just enter the broker’s name and check for them in these two list items:

• Credit Representative

• Credit Licensee

If the broker doesn’t appear on one of these lists, they are operating illegally. If they did appear, that’s good news because your broker is licensed.

Experience and Reputation

A well-reviewed broker with a proven track record in refinancing would give you the peace of mind of having an expert dealing with your refinance.

Reputed brokers also hold more negotiating power with lenders, which could help you secure better loan terms than less-reputed ones.

Availability and Communication

Before committing to a refinance broker, make sure they’re responsive, transparent, and communicative throughout the refinancing process.

You need someone who will keep you updated every step of the way. You need them to address your queries. You need them to make things easier for you. 

A good broker will check all these boxes, but it’s also good practice to ask for their responsive contact number so that you can keep in touch throughout the entire process.

Calculate Your Savings

Although your broker will communicate your savings with you, it’s worth doing your due diligence by calculating how much you could save by refinancing with an accurate refinance savings calculator.

It takes your current remaining loan balance, current interest rate, new interest rate, etc., to give you an accurate estimate of how much you could save by refinancing.

Should You Refinance Your Home Loan With a Broker?

The decision to seek the help of a mortgage refinance broker depends on your individual situation.

If you want to save time and effort, there’s no better way than refinancing through a broker. The process is lengthy, taking 1-6 weeks on average for the application process alone. If you choose to find a suitable lender yourself, that will add a lot more to that timeframe.

A broker brings all of the refinancing processes together in one place. That’s where you can find your lenders, browse your options, and close the deal. It saves time—a lot of it, in fact.

Another case where a broker proves helpful is if you’re refinancing for the first time. The paperwork involved in the refinancing process is different from the one you did when you got your first home loan. And there’s plenty of paperwork involved.

Your broker will help you through it all, even by handling most of the paperwork. 

So, it all comes down to your current situation. Want to save time or need help with the process? Consider a mortgage refinance broker.

Why Koalify Is the Right Mortgage Refinance Broker for You

Koalify is a licensed and reputed refinance broker with a highly experienced team of professionals who can help you find the most suitable refinance offer.

We work with the top 30+ lenders across Australia, striving to help you save money on your home loan while providing you with expert, unbiased, and fully personalised guidance to help you make the right refinancing decision.

Even better, you don’t pay us anything to receive your offers. It’s free and risk-free, and we help you save money!

Sounds like we’re worth a try? Contact us today!

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