Refinancing Timelines: What Not to Do When Switching

A refinance usually takes several weeks from first conversation to settlement, and the timing depends mostly on how quickly documents and valuations move. Planning backwards from a deadline, such as a fixed rate expiry, protects you from rushed decisions.

This article is for Surrey Hills homeowners who want to switch lenders and need to know when to start. The main point is to begin well before any deadline, because the biggest cost of a slow refinance is often time spent on a rate you wanted to leave.

How Long Does a Refinance Take?

A refinance commonly takes around three to six weeks from application to settlement, though this varies by lender, loan type and how complete your paperwork is. Straightforward applications with prompt documents sit at the shorter end.

The process moves through several stages. First comes a review of your current loan and goals. Then your broker compares lenders and lodges the application. The lender assesses your income, expenses and debts, orders a property valuation, and issues an approval. After that, you sign loan documents and the new lender arranges settlement with your old lender, who discharges your existing mortgage.

Each stage has its own waiting period. Assessment and valuation tend to take the longest, and they are the parts you control least. That is why early preparation matters more than chasing the lender once you have applied.

Where Refinance Applications Get Delayed

The most common delays come from missing or out of date documents, valuations that come in lower than expected, and unresolved questions about income or debts. Each can add days or weeks.

Payslips, bank statements and loan statements need to be current when the lender reviews them. If a lender asks for extra information, the clock often pauses until you reply. Self-employed borrowers may need to provide more detail about their income, which can lengthen assessment.

Valuations can also change the plan. If the lender values your home below what you expected, the loan amount you can access or the rate tier you qualify for may change. A property report before you apply gives you a realistic idea of where your home might sit.

A tidy credit file helps too. Unused credit cards with high limits still count against your borrowing power, so closing ones you do not need before applying can avoid a last minute reassessment. Check any early closure effects with your broker first, as it may suit some people and not others.

Starting Early When Your Fixed Rate Is Ending

If your fixed rate is ending, begin the refinance process at least two months before the expiry date. This leaves room for assessment, valuation and settlement without defaulting to your lender's reversion rate.

Consider a Surrey Hills homeowner whose fixed term ends in eight weeks. They have a loan of $600,000 and the lender's standard variable rate would apply once the term ends. They contact a broker straight away and complete a loan review in the first week. Documents are gathered in week two, the application is lodged by the end of week two, and the valuation and approval take about three weeks. Settlement is booked for week seven, a week before the expiry.

To show what is at stake, use an illustrative rate of 6.75% p.a. over a 25 year term. Repayments on $600,000 would be about $4,145 a month. If a lower rate of 6.25% p.a. were available instead, repayments would be about $3,958 a month, a difference of around $187 a month. Those figures are illustrative only. Actual rates depend on your deposit size, loan type and lender.

The outcome in this scenario is a seamless move before the reversion rate applies. Had the homeowner waited until week six, settlement could have slipped past the expiry date and they could have paid the reversion rate for a few weeks. You can read more on fixed rate expiry and the choices you have when it arrives.

Do You Need to Wait Until a Fixed Term Ends to Refinance?

No. You can refinance during a fixed term, but break costs may apply, and these can outweigh any saving. Ask your current lender for a break cost estimate before you commit.

Break costs depend on how much of the term remains and how rates have moved since you fixed. They can be large or small, so they need to be weighed against what you would gain. Switching also has other costs to check, such as discharge fees and application fees, and some lenders offer to cover part of them. The trade-off is that cashback offers often come with conditions, such as a minimum loan size or staying for a set period.

Timing a Refinance to Access Equity

If you want to access equity to renovate or buy another property, build extra time into the plan, because the lender needs a valuation and a full assessment of the new loan amount. Allow a similar window to a standard refinance, and sometimes longer.

The key point is that borrowing more increases your repayments and your debt, so the lender will test whether your income can support it. Your borrowing capacity sets the ceiling, and the valuation sets how much usable equity you hold. If the purchase has a settlement date, such as an investment property, get the refinance approved before you sign the contract, as the finance should not depend on a loan you have not yet secured. Our investment loans page covers this in more detail.

A Loan Health Check Before You Apply

A loan health check compares your current loan with what other lenders offer, and it works best when done a few months before you need to act. It shows whether refinancing is worth the effort, or whether a call to your current lender is enough.

The check looks at your rate, fees, features such as an offset account or redraw, and your remaining term. It also shows how much a new loan might cost to set up. Our loan health check is a starting point, and you can use the mortgage repayment calculator to test different scenarios. If the saving is small, staying put may be the sensible result.

If you are ready to look at your options, call one of our team or book an appointment at a time that works for you. James Hawkins can walk you through refinancing for your situation and give you a realistic timeline before you lodge anything.

Frequently Asked Questions