Refinance Your Mortgage
Do you feel like your bank isn’t giving you the right level of service or unsatisfied with the rate of interest being charged? Well you certainly aren’t alone, with many borrowers feeling they can get a better deal elsewhere.
On paper it might seem like a good idea however there are some important information to take into consideration before getting the ball rolling. Here are a few things to consider,
The time line to refinance is generally 3 – 5 weeks depending on a few variables. The process starts when you initially start to shop around or have your mortgage broker shop around for you. Once the right lender and home loan option is found (that best suits), the application process is started. This is where supporting information such as payslips and home loan statements would be required. There may be a valuation on the property, depending on the lender. Once this is completed the lender will finalise the approval and send contracts to sign. Once signed contracts are held the lender will finalise arrangements with the soon to be redundant lender to refinance to mortgage. Usually you’d start paying your new home loan within the first month of settlement.
When refinancing it’s important to have a clear purpose and desired outcome, so you can determine if you’ll be better off. Are you after a lower interest rate? Release equity to purchase another property or consolidate debt? Better service? Reduce ongoing fees? or increased flexibility? Knowing exactly what you’re after will give you clarity. Most people consider refinancing their mortgage when their fixed rate term ends or if variable every 3 – 4 years. Each lender has a slightly different product and service offering, the key is to find the lender that is best suited to your situation.
It’s essential to take into account the expense of refinancing verses the cost of staying with your current lender. Now days the upfront costs to refinance are quiet reasonable, especially when compared with the thousands of dollars in interest you could be potentially outlaying to stay. To give you an idea on what costs might be applied to your refinance:
Loan Application Fee: Applicable by the lender when applying for a new loan.
Exit Fees/Break Costs: Although earlier termination fees have been abolished in 2011, lenders will charge an exit fee/break cost for fixed rate loans that are still in there fixed term. The fee is calculated by the lender on a daily basis – based on the fixed rate, the variable rate, loan balance and remaining term.
Valuation Fee: Your lender may charge a fee to have your property valued.
Settlement Fee: Your lender may charge a fee to pay out your current mortgage.
Discharge Fee: Most lenders will charge $150 – $400 to discharge your loan
Mortgage Registration (Government Fee): The land titles office will charge a mortgage deregistration and registration fee. This is to register the mortgage on the title.
Lenders Mortgage Insurance (LMI): Only one off fee only applicable if you have more than 80% of the purchase price owing on your home loan refinance.
Mortgage brokers tend to have better relationships with lenders and can therefore negotiate harder on your behalf.
Contact us today – Nathan Vecchio – 0410 000 689