Is Refinancing worth the fuss?

Is refinancing worth the fuss?

Refinancing your home loan may seem like a lot of hassle. But it pays to
review your home loan regularly and you may find a better deal that
could save money in the long run.

Once you have a home loan, you’re under no obligation to stay with that lender, or that specific
home loan, for the life of your mortgage.

Refinancing refers to the process of switching your existing loan for a new one, either with your
current lender or a different lender altogether. The home loan market is very competitive, with
lenders trying to entice borrowers with low rates and cashback offers. Usually, these incentives are
only offered to new customers – not existing ones. That means you might be missing out if you
don’t look around for a better deal.

On average, Australians with existing home loans pay 0.41% more than customers with new loans.
Keeping these new customer rates can mean significant savings of up to $1,799 per year, or up to
$44,998 across the life of your loan.1

What’s the point of refinancing?

People choose to refinance their loans for many different reasons. Here are five of the most
common ones:
1. Secure a better interest rate.
2. Change your loan structure, e.g. from a variable interest rate to a fixed interest rate.
3. Consolidate other debts that have a higher rate of interest, e.g. credit cards and person
loans.
4. Switch to a loan that offers more features (or to a more basic loan that may cost less).
5. Unlock equity in your home to finance a renovation, take a holiday, or use as a deposit to
purchase an investment property.

Is it time to review your current home loan?

Mortgage Choice Warners Bay will evaluate your current loan and compare its rates,
fees and features with thousands of other products to check that you have the loan that’s best for
you.
Even if you’re not ready to refinance right now, it makes sense to meet with your broker annually
to ensure your loan still meets your needs.

Is a cashback offer better than a low rate?

Some lenders offer a cashback payment as an incentive for you to refinance your loan with them.
Depending on the lender, this can be up to a few thousand dollars.
To receive these offers, you’ll need to meet the eligibility requirements of that specific lender and
apply for a refinance within the period the cashback offer is available. You don’t have to use this
money on your mortgage – it’s paid to you as cash after your refinance is complete.
Cashback offers are tempting – in some cases, they might cover the costs of switching to a new
lender completely. But they’re only worth it if the lender is also offering a better rate and the home
loan has the features you’re looking for.

Mortgage Choice Warners Bay can help you compare the different options so you can
work out which home loan will be best for you in the long term, not just the short term.

Is it better to stay with my lender or go to a different lender?

A simple way to negotiate a better deal is to ask your current lender for a discount on your home
loan. This is why we normally recommend looking into this option as a first step before refinancing
with another lender. Mortgage Choice Warners Bay will contact your current lender
and try to negotiate a better rate on your behalf. If your current lender won’t budge on your rate,
we’ll search for a better deal with a different lender.

How much does it cost?

While every customer and home loan are different, there are some standard costs that you’re
likely to encounter if you decide to refinance. Mortgage Choice Warners Bay can help
you estimate these costs and weigh them up against the benefits you’ll get from switching your
loan, so you can make an informed decision about whether to go ahead.

Here are some of the costs you might be charged if you refinance your home loan:
● Borrowing costs charged by your new lender, which may include a loan application fee,
valuation fee and settlement fee
● Lender’s Mortgage Insurance if you’re borrowing more than 80% of your home’s value
● Mortgage Registration Fee for registering your new mortgage on to the title record for the
property
● Break costs if you refinance a fixed rate loan before the fixed term is up.

What’s the process?

Once you’ve settled on a particular loan, refinancing works in much the same way as applying for
your original loan.
You’ll need to apply for your new home loan, which means getting your financial information
together to support your application. This usually includes recent pay slips and tax returns, your
latest council rates notice, evidence of building insurance you have on your property, and a record
of any other money you owe (e.g. credit card statement). We’ll let you know what the lender
needs so you can gather this information. Once your loan is approved and settled, your new lender
will pay out your current loan on your behalf and you can start making repayments on the new
loan.

Get in touch
If you’re considering refinancing your home loan, please get in touch with Mortgage Choice
Warners Bay on 0249481955 or admin.warnersbay@mortgagechoice.com.au 

We’d love to help you reviewyour current home loan and search for a better deal.