Refinancing costs
The costs of mortgage refinancing can range from hundreds to thousands of dollars, depending on your specific circumstances. The range of fees and charges you may be liable for include both exit and entry fees, many of which will depend on your specific situation and current lender.
Confirm which home loan is in your best interest
To find out if your home loan is still in your best interest or if a mortgage refinance will be beneficial for you, simply fill in the form below or call us any time on 13 LOAN (+61 2 9249 3739).
Exit fees
Typically you can expect to pay a discharge or exit fee when terminating your current loan. You may also need to pay:
- Deferred establishment fee
- Deferred settlement fee
- Penalty interest (fixed-rate loans)
- Switching fee (when refinancing with your existing lender)
As a guideline, things that will affect which fees you are charged and how hefty they are include: the size of your loan; the point you are at in your loan term; which lender holds your current loan; the type of loan (e.g. fixed vs. variable); and whether you are switching loans or changing lenders completely.
Entry fees
You will also be liable for a range of entry fees for your new loan. Again, which fees you have to pay will depend on your lender, loan and what deal you/your mortgage broker is able to negotiate for you with your new loan. Fees may include:
- Application fee
- Lenders Mortgage Insurance (for loans with an LVR greater than 80%)
- Valuation fee
- Duties and taxes (eg. stamp duty)
- Legal costs
Why do lenders charge exit fees when you refinance your mortgage?
When you take out a home loan with a lender, they factor your repayments into their balance sheet. If you decide to undertake a mortgage refinance instead of seeing out your loan term, the lender then needs to replace the money they would have been earning from you over the course of your loan; they do this through exit fees.
Exit fees are essentially the lender’s compensation for you withdrawing from a contract. This practice is common in most professions when a contract is broken. Consider for example when you were renting a place to live in. There would have been a clause in your tenancy agreement outlining the costs payable by you to the landlord for exiting your lease early. Exit fees work on the same principle.
The earlier in your loan term that you complete a mortgage refinance, and the larger your home loan balance is, the higher your exit fees are likely to be.
For more information on mortgage refinancing costs
To find out more about what fees and charges you will be liable for with a mortgage refinance, and for assistance determining whether or not mortgage refinancing is in your best interests, talk to your local mortgage broker. Or call us at any time on 13 LOAN or direct on +61 2 9249 3739.
