Home Loan Refinancing On the Rise…What To Look Out For
Silly Season or Spending Season? Either way, why not use this time to save money while you spend! We’ve seen an increased demand for refinancing to consolidate credit cards and other personal debts. With our full mortgage health check we can un-cover better rates and features to reduce the interest and fees you currently pay.
Banks are currently at their most competitive. Cashbank offers of up to $1250 to bring your loans over. Rate discounts up to a percentage off the standard variable and fixed rates slowely on the rise.
As the demand increases, so to the need to refinance the smart way. All too often, the only thing most people look at when refinancing is getting a better rate. Although this is important, I want to uncover some other critical factors too look out for….that could save you much more than just a better rate!
Cash back offers. Does your new lender have a cashback offer? Currently there are several lenders doing this. Yes you can negotiate a better rate AND have some money back to cover your costs of refinancing! Ka Ching!
If you are moving your entire banking to a new lender, make sure you are not losing features that you currently use. For example if you are finding that an offset account is useful, don’t be tempted to refinance to a no frills type loan that doesn’t have these features, or a lender where the offset account is not as accessible. I see a lot of this and in the long term you may in fact be worse off!
Check your exit fees. Although Home Loan exit fees have been officially abolished, this only took affect if your loan settled after July 1, 2011. If your loan had settled prior to this then I suggest checking your loan contract or calling your broker to have a look into it. You could be up for thousands depending on lender.
Find a lender that has both competitive fixed and variable rates. This is soooo important. You may be enticed into a cheaper variable rate for now with a lender that has extremely discounted rates, however their fixed rates may be much much higher. Now, you may be thinking that you don’t need to fix but with so much movement in the market your opinion may quickly change. You do not want to be in a situation where you refinance too frequently as the costs of admin fees will add up.
If possible, ask your broker if they could order a valuation up front. This way you know what your Loan To Value Ratio is (LVR) before applying for your loan. This helps with avoiding mortgage insurance costs, and also alleviates the need to apply for a loan before knowing what your figures will be.
Do you have other accounts and credit cards to bring over to the new bank? Use this as a negotiating tool! The banks profit from having your entire banking with them so make sure they know that YOU know this….I certainly will!
I could go on and on but knowing about your new lender is very important.
For more refinancing tips and mortgage help contact me.