Overview
With the banks continually increasing their interest rates many people are looking to reduce their mortgage repayments by looking for a better deal. But it is often not as straight forward as you would think with many factors affecting the final outcome of your new home loan. What I would like to do here is show you exactly what you need to look for and how to get the real best deal on your new mortgage.
Firstly you need to determine exactly why you are looking for a better home loan and what type of home loan you are going to want to switch too. And secondly and most importantly you need to be fully aware of the costs associated with refinancing your home loan.
The reasons most people refinance is to get a better rate. So let’s look at some important points to consider.
- Exit fees from your current home loan
- Entry fees to the new home mortgage
- Any additional ongoing fees of the new mortgage
Exit Fees
There is little point is saving say $20 per month on your home loan if your current lender is going to charge you a large exit fee. You need to contact your bank and request a payout figure which will determine the amount of additional payments required to switch products. This is very important and must be done by you not the mortgage broker or new lender.
Entry Fees
Again making a saving of $20 per month can be far out stripped by the new lender if they are going to charge high entry fees. If you are going to save $20 per month but it is going to cost $1000 to get in to the new loan then it will take you a while to actually get ahead.
Additional Ongoing Fees
Many funders will offer you a discount on your new home loan but it might just come with a annual fee. Quite often these fees will wipe out application fees and any ongoing fees but you need to examine it carefully to ensure you are going to be ahead when you make the change.
If you have taken all these into account then the next area you need to look at are any legal fees that may affect your new home loan. These would include stamp duty and the lenders legal fees like solicitors fees that are often not disclosed. Make sure you talk to your new lender or better still use a mortgage broker, they don’t charge you for their service and they act in your best interest.
Another important point to note in regards to the AAPR rating of a now mortgage is that this figure can be tweaked to give an inaccurate AAPR interest rate. If a funder offers an application fee and a separate valuation fee then sometimes the AAPR might not show this. I am not saying the all AAPR’s are inaccurate but what I am saying is that you really need to examine the fees in details to know that you are getting the best deal.
Use a Broker
If you’re considering refinancing your home loan then the best thing you can do is utilize the services of a good mortgage broker. The reason is simple, their services are fee and their job is to know all this information when considering your needs. They get paid by the new lender not you and quite often they may be able to keep you ate the same bank by identifying a cheaper product than the lender gave you.
We offer a number of services to put you in contact with the best broker to suit your needs so if you’re considering refinancing your home loan send your details to us on our web sites and we will direct you to the best local broker that suits your needs.
