Refinancing can make your mortgage easier to live with, but be sure to balance the pluses with the pitfalls.
Today's mortgage market is brimming with choice. In an environment of expected interest rates and intense competition between lenders it pays to put refinancing on your agenda.
Refinancing generally refers to the process of replacing your existing loan with a new loan from the same or a different lender. This may involve some fresh paperwork and loan applications but the rewards can be worthwhile.
It makes good financial sense to check if your existing home loan offers a competitive interest rate, charges minimal fees and offers useful and value-for-money features suited to your lifestyle and needs.
According to Mortgage Choice’s latest Refinancers Survey, 68% of Australians who refinanced their home loan in the last 12 months saw their interest rate drop.
Of these, almost one quarter (23%) were now saving more than $300 per month while close to nine in every 10 (88%) were saving more than $50 per month.
The downside to refinancing is that it can involve new costs. Many lenders impose ‘exit’ fees. However, these will be abolished from I July 2011. You may also have to pay break fees if you refinance a fixed rate loan before the fixed term expires.
Extra fees and charges can also be charged on your new loan. The key is to crunch the numbers - or ask your broker to do it for you, to check that the benefits outweigh the costs.
That said, cost savings are not always the key driver behind refinancing decisions.
For more information contact Richard Windeyer on 1800 01 LOAN or click here to "Book a Meeting"