The Australian home loan market is a rapidly changing beast.
New and innovative products hit the market daily, which we are constantly notified of by news and media outlets, yet surprisingly many Australian’s continue to avoid refinancing their home loans – which is often offering significant savings.
Historically, dealing with banks has been a tedious process and the effort required to try and save money was met with anger and frustration.
While banks have worked on process improvement, they still have their moments. The questions you should really be asking yourself when reviewing your home loan is - how much is my time worth?
The reality is that the ends justify the means. With interest rates now below 3% you’re mad not to check what your options are for a better deal. With some of our recent clients saving close to $5,000 per year – that’s a lot of money over 30 years ($150,000 to be exact!).
For ease and simplicity you should use a mortgage broker to help you regularly review your home loan.
It’s a mortgage brokers job to find you the most suitable solutions that can save you thousands and help minimise your effort throughout the entire process. Other benefits include often getting better interest rates than advertised, extra features in your home loan, utilising debt consolidation or accessing equity in the property to help fund a new purchase or renovations.
How much does it cost to refinance?
The short answer is – for a variable rate home loan, all inclusive, you can get this done for less than $800 depending on the lender. And in some cases we can get your new bank to foot the bill so it costs you nothing. All “costs” are can be added into your mortgage so there is nothing to pay upfront.
When should you refinance?
If it’s been a couple of years since you last reviewed your home loan, there is a chance that your bank is making more money off you than they should be. A simple approach to determine whether you are ready to refinance is assessing if the benefits of changing, outweigh the costs. Specifically consider the following:
- Is there 20% equity in the property? You want to try and avoid Lenders Mortgage Insurance (LMI) when refinancing. In some cases, it makes sense to incur this premium but significant interest savings need to be established here.
- Are there break costs? Fixed rate loans incur higher fees when closing a loan down before expiry. Obtain these from your lender because it might make a change unfeasible.
Our advice is to speak to a mortgage broker and reduce your burden of work (time and effort, whilst ultimately saving money). As professional mortgage brokers, we can assess your situation, determine if its costs effective and make suitable recommendations for change. We fully understand all the terms and conditions, industry lingo and know what to watch out for – and we clearly explain all this to you throughout the process.
It’s our job to ensure you make fully informed and smart financial decisions.