How long does it take to refinance a home loan?

Refinancing a home loan is a paperwork exercise with a queue in front of it. Nothing about it is technically hard, which is why people are often surprised that it runs in weeks rather than days. The waiting sits in valuations, document turnaround and the discharge of your existing mortgage — three steps you do not control directly.

Here is how the timeline usually breaks down, which stage tends to stall, and what you can do before you apply to keep the whole thing short.

How long does it take to refinance a home loan?

From a complete application being lodged to the new loan settling, a refinance commonly takes somewhere between two and six weeks. A straightforward application on an ordinary suburban property, with payslips and statements all supplied up front, sits at the short end. Anything needing a full inspection of the property, a self-employed income assessment, or a discharge from a lender working through a backlog sits at the long end. Before that clock starts, allow time for the part most people underestimate: comparing loans and gathering documents. No timeframe can be promised to you, because both the credit decision and the settlement date belong to the lender, not to you or to your broker. What a broker can tell you is which lenders are moving quickly in the week you apply, since processing queues shift through the year and around end of financial year in particular.

What are the stages of a refinance, and how long does each one take?

A refinance moves through the same sequence every time, and knowing which stage you are in tells you how much is left. Roughly:

• Preparation — comparing loans, checking your existing loan for fixed-rate break costs, and collecting identification, payslips, tax returns, bank and loan statements. A few days to a couple of weeks, almost entirely under your control.
• Application and assessment — the file is lodged and a credit assessor works through income, expenses, existing debts and your credit file. Usually several business days, longer when the assessor comes back with questions.
• Valuation — the lender forms its own view of what the property is worth. A desktop or automated valuation can land the same day; a full inspection has to be booked, attended and written up.
• Formal approval and loan documents — documents are issued, signed and returned. Electronic signing has compressed this stage; posted documents have not.
• Discharge and settlement — your existing lender is asked to release its mortgage, the two lenders book a settlement date, and the new loan pays out the old one. Typically the longest single wait.

Why does a refinance take longer than people expect?

Almost every refinance that drags does so for one of a handful of reasons, and most of them are visible in advance. An incomplete application is the most common: a missing statement or an unexplained transfer sends the file back to you and costs days each time. A full valuation adds a booking. A fixed-rate loan has to have its break cost quoted by the existing lender before the numbers can be judged, and that quote is only good for a short window. Title problems — a name that does not match your identification, a caveat, an old guarantee still registered — surface late and take the longest to clear. And the discharge request itself has its own queue at the outgoing lender, which is why the step with the least work in it often accounts for the most calendar time.

Discharging your existing mortgage is usually the slowest moving part of a refinance, and it is the one step your new lender cannot do for you.

Can you speed up a refinance?

You can take days out of it, mostly at the start and mostly by removing reasons for anyone to wait on you. Lodge a complete file: identification, recent payslips or two years of tax returns if you work for yourself, statements for every account and every debt, and the exact balance and account number of the loan being replaced. Sign the discharge authority as soon as it is given to you rather than at the end, because that request is what starts the outgoing lender's clock. Keep your accounts tidy and avoid applying for other credit while the file is being assessed, since every application is recorded on your credit file and a cluster of them invites questions. Then answer any request from the assessor the same day. None of this changes the lender's processing time, but it stops the file idling.

If you are weighing whether the switch is worth making at all, the loan comparison calculator puts your existing loan against the one you are considering, and the loan repayment calculator shows what the new repayment would look like.

What happens at settlement, and when do your repayments change?

Settlement is a bookkeeping event rather than a meeting. On the agreed date the new lender advances the funds, the outgoing lender is paid out, its mortgage is released from the title and the new mortgage is registered. You usually do not need to be present or to do anything on the day, though you should keep enough in your old account to cover any final interest and fees charged on the way out. Your first repayment on the new loan generally falls due a month or so after settlement, and the old direct debit stops once the account is closed — check that it has, because a stray debit after payout is a common nuisance. If your new loan has an offset account or a redraw facility, it is worth setting those up in the same week rather than later, while you still have the lender's attention.

Does the wait itself cost you anything?

Usually not much, and this is the reason not to rush the comparison in order to start sooner. While the application is in progress you keep paying your existing loan on its existing terms, so a longer process does not add fees; it only delays the point at which the new terms start. Set against that, a decision made in a hurry lasts for years. The switching costs — a discharge fee, government registration fees, sometimes a valuation or settlement fee, and break costs on a fixed loan — have to be recovered out of whatever the new loan improves, and that break-even arithmetic is worth doing properly before you lodge. The same test applies to incentives: our guide to refinance cashback offers works through why a one-off payment and a long-run interest cost are not comparable numbers.

What is the next step?

Start with the two things that sit entirely on your side of the process: pull the balance, rate and any fixed-rate expiry date off your current loan statement, and put your last two payslips and two years of tax returns, if you are self-employed, in one folder. With those in hand, a broker can tell you within a conversation whether a switch looks worth investigating and which lenders are currently turning applications around quickly. Our refinance service page explains how we work through it, when and how to switch covers the decision itself, and how lenders value property explains the step that most often sets the pace. We are in Williams Landing and work across Melbourne's west.

This is general information only and does not take your personal circumstances into account. All lending is subject to the lender's credit assessment and approval, and processing times vary between lenders and over time.

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