Priority Refinance, also known as Fast Refinance, is a streamlined and faster refinancing solution compared to traditional refinancing processes. It allows borrowers to access their new loan within days, rather than weeks after signing loan documents, by removing the step of arranging a settlement with the Outgoing Financial Institution (OFI). Priority refinance is different from the standard refinance which may take two and four weeks to settle and fund your new loan.
How does Priority Refinance benefit its customers?
This solution offers benefits to customers, allowing them to access their new loan terms and funds much sooner, providing more certainty and assurance of when their new loan will be activated. Priority Refinance also costs borrowers no more than a standard refinance, and it is trusted, with thousands of customers using it each month.
What home loans can you refinance?
Priority Refinance or Fast Refinance is only available for eligible home loans from selected lenders. Your and your loan must meet the standard lending criteria of the new lender and the priority refinance process eligibility criteria.
You can’t refinance the following:
- Business loans
- Bridging loans
- Fixed-rate loans where the fixed rate end date is greater than 30 days
- Lines of Credit
- Reverse mortgages
- Commercial loans
- Construction loans
How does Priority Refinance work?
Step 1: The borrower completes their home loan application and documentation with their broker.
Step 2: Once the borrower’s loan is assessed and approved, they receive a loan documentation pack. With Westpac, this includes two Priority Refinance forms, the Borrower’s Acknowledgement, Undertaking and Payout Advice (BAUPA) form, and the Irrevocable Authority form, along with other required loan documents. With CBA, FASTrefi borrowers need to complete the Borrower’s Irrevocable Authority (BIA), the Borrower’s Acknowledgement Undertaking and Pay Out Advice (BAUPA) and the OFI discharge authority.
Step 3: The borrower completes and returns the forms and other loan documents. Once they are verified, the new loan is activated, and the borrower can begin enjoying the features of their new loan and accessing any additional funds, if applicable.
Step 4: The final step is the settlement of the loan with the old lender, which can take a few weeks to complete.
How is the estimated payout figure calculated?
To calculate the estimated payout figure required to close the old loan, the current loan balance is added to one month’s interest payment amount, the current month’s accrued interest, the outgoing lender’s estimated discharge fee of $350, and a $500 buffer to cover any other fees and charges from the outgoing lender.
Example:
Let’s say the borrower’s current loan balance is $200,000 and the monthly interest rate is 6%.
To calculate the estimated payout figure, we would first need to determine the one month’s interest payment amount and the current month’s accrued interest.
One month’s interest payment = ($200,000 x 6%) / 12 = $1,000
To calculate the current month’s accrued interest, we can assume that the borrower is refinancing in the middle of the month, so the accrued interest would be half of the one month’s interest payment.
Current month’s accrued interest = $1000 / 2 = $500
Next, we need to add the outgoing lender’s estimated discharge fee of $350 and the buffer of $500 to cover any other fees and charges.
Estimated payout figure = $200,000 + $1,000 + 500 + $350 + $500 = $202,350
Therefore, the estimated payout figure required to close the old loan is $202,350. Do take note that the buffer is not a fee, and any surplus funds from the payment to the old loan will be returned to the borrower following settlement.
Important Reminder
It is important to continue paying the loan repayments until notified otherwise and to cancel all direct debits linked to the old loan account. Redrawing any funds from the old loan account is not recommended, as the current loan balance is used to calculate the payout figure needed to close the old loan.
We’re here to help you!
If you’re interested in Priority Refinance or Fast Refinance or have questions about whether you’re eligible, we’re here to help. Our team of mortgage professionals has years of experience helping homeowners refinance their mortgages, and we can guide you through the process from start to finish. Contact us today to learn more about how Priority Refinance can benefit you.
Maria Papa is a senior property and finance expert specialising in home loans, investment loans, self-employed loans, alt doc loans, car loans, personal loans, and loan protection. She has offices in Sydney, Melbourne, and Manila. If you have questions, you can call Maria at 0430 144 008 or email her at mpapa@maverickfinance.com.au.
Disclaimer: Your full financial situation will need to be reviewed prior to acceptance of any offer or product.