Thinking about refinancing your home loan? Before you pull the trigger, there are a few key points you may want to consider.
Check the comparison rate
The interest rate might look great, but how does the comparison rate stack up against your current home loan interest rate? The comparison rate includes the interest rate as well as the fees and charges associated with the loan. Ultimately, it helps you to get an idea of the actual cost of the loan, so it usually pays to compare the comparison refinancing rates rather than the interest rate alone.
In some cases, you might have to pay up to exit your home loan. If you’re currently on a fixed-rate home loan you might get charged a break fee if the fixed rate period isn’t up yet. It’s well worth checking how much you could be up for before making the switch, but that’s not to say it’s not worth moving to a different lender if there are still savings to be had.
Features with your new lender
If you’re used to having access to certain features as part of your existing home loan it’s worth checking that you’ll be offered a similar setup with the new loan.
Check your LVR
If your LVR is more than 80% you might have to pay LMI again with your new lender. This can be a significant cost, especially if you’ve already had to foot the bill for it, so be sure to take this into account when deciding whether to switch.
Ready to refinance? Here’s our six step guide to refinancing and how it works.
The article does not have regard for the financial situation or needs of any reader and must not be relied upon as financial product advice. As this information has been prepared without considering your objectives, financial situation or needs, you should, before acting on this, consider the appropriateness to your circumstances.