Thanks to historically low interest rates, many Australians are looking to refinance their mortgage loan to save money. Applying for a refinance of your home loan provides many potential advantages, including:
To achieve the above benefits, it’s important to evaluate your situation and apply for refinancing at the right time. Keep in mind that you must pay several fees to initiate and accept a refinancing loan. These fees are as follows:
If you were fortunate enough to get a fixed rate on your mortgage for the life of the loan, you would probably save the most money sticking with the lender you have. Some people have a fixed rate for several years that transitions to a higher rate later. In this case, you want to avoid applying for a refinance loan while the fixed rate is in place so you aren’t assessed a large break fee.
Be sure to ask your lender for exact figures for the above fees so you can weigh what you must pay against your potential savings. Just remember that it may take a year or longer to break-even but that you can expect savings from that point forward. It never hurts to shop around and compare costs and savings to ensure you’re getting the best deal. After all, your current lender isn’t going to offer to lower your interest rate or payment just to be nice.