Have you recently reviewed your home loan?
As the market and your personal circumstances change, you may have new requirements for a loan, where your old mortgage is no longer suited. Refinancing a mortgage is a great way to save money, consolidate debts or to get some extra funds for your desired renovations.
The multiple interest rate changes recently have led to borrowers being inundated with so many increases to their rate, that they forget what rate they’re currently paying and think that all banks would be around the same rate. That thought process is incorrect, as there are many great offers available with lower rates for new customers as opposed to existing customers, whilst this does not seem right, it’s what we call the loyalty tax!
Sometimes it’s not only the interest rate that matters, as there are some great refinance offers that banks are making, with cashbacks being one of them. This is when a mortgage broker can consider all the options and help you to select the best rate available whilst also meeting the individual’s needs.
Why Refinance Your Mortgage?
A common refinance reason is an increase for renovation. The growing real estate market means that the value of property has increased, and homeowners now have more equity in their home, this allows this equity to be used to assist in getting extra funds to make home improvements. There is the potential that it could also result in a better interest rate as you are borrowing a smaller amount of the overall house’s value which can reduce the rate due to the lower risk to the bank.
How Much Does it Cost to Refinance?
There are costs that are associated with refinancing, it costs $350 to discharge the mortgage from your bank and then an additional discharge fee of $123.50 by the government. On top of these two fees, there is also another $123.50 government fee that is to register the new loan at the new financial institution. This is a total of $597 in extra fees that are incurred when refinancing to another bank and whilst this may seem like a lot of fees to pay, refinancing to a lower rate can cover these costs. Refinancing to a lower interest rate allows you to save extra money on interest in the first 12 months, which results in you easily covering the cost of the fees and still saving money!
For any further questions around refinancing your home loan, Glenn McMahon at Bendigo Mortgage Brokers is always available for an obligation free chat - You can contact us via our homepage or on 0427 413 603.