The term Rapid Refinance is a speedy process allowing for a quick refinance. Some lenders refer to this as Rapid Refinance, Speedy Refinance, Quick Refinance, or Fast Settlement.
In general terms a normal refinance takes between 4-6 weeks from the time of submission to the time of settlement. In this time, your loan application undergoes an assessment process, valuation and then formal documentation process. Once a borrower receives his letter of offer and signs this, the new incoming lender notifies the outgoing lender that they intend on taking over the mortgage.
Once the outgoing lender receives notification that they are going to be refinanced they have up to 4 weeks to prepare the discharge request. This time delay is at times frustrating and can create issues especially if the outgoing property is to be used for a purchase of another property.
Who uses Rapid Refinance?
Rapid Refinance is a process used by some large institutions to speed up the refinancing conducted by other institutions. In this process the new incoming lender reviews the statements of the outgoing lender up until the last 4 weeks before implementing a Rapid Refinance. By reviewing the statements of the outgoing lender and the available credit limit, the new incoming lender can actualize the approximate balance of the existing loan to be discharged. When the approximate balance is determined, the new incoming lender pays out the mortgage of the outgoing lender before collecting the title deeds as would be the norm. This is usually done within 48 hours of lenders receiving signed and completed loan offer documentation.
This speedy refinance process has some conditions in place. In most cases the outgoing lender needs to be a major lending institution like an ANZ Bank or Westpac or Major Credit Union. Further, the existing loan to be paid out can’t be a fixed loan or a line of credit as they could have large penalties for breaking the loan or still hold large loan limits and could be redrawn at any time before settlement.
Does a Lender hold back any funds during a Rapid Refinance?
Some lenders who do the Rapid Refinance hold on to $2000-$3000 of the borrower’s money for up to 4 weeks as a reserve to cover any unforeseen expense that could have arisen at settlement time. After 4 weeks or so the lenders reconcile the correct positions of the borrower and then refund the reserve money to the borrower. There is NO cost for the borrower to do a Rapid Refinance.
This Rapid Refinance is a popular process as it cuts out delays and avoids unnecessary delay costs from the outgoing lender.
At Mortgage Providers, we know which lender use the Rapid Refinance processes. Above all, we know exactly how to explain it to you as the new customer making your experience with us smooth and enjoyable.