With such a wide range of mortgage products available today, it can be overwhelming trying to work out the pros and cons, and if the mortgage you have
is the best option for you. In the current home loan environment, the general rule of thumb is that the rate should start with a three.
However, if it doesn’t and you’re looking to change your mortgage, there are a few key things you need to consider.
How Do I Know if I’m Paying Too Much?
If your mortgage rate starts with a four, then it is likely you are paying too much. Simple rate reductions will let you pay off your mortgage faster,
potentially saving you thousands of dollars. Many people do not take the first step in reviewing their mortgage due to the perceived time and frustration
involved in changing or refinancing.
Will Your Costs Reduce?
While you can do your own home loan research online, by reviewing comparison websites and bank websites for fees and charges and switching costs, you are
more likely to get a better result by engaging the services of a mortgage broker. Their free service, access to a wide range of lenders and products as well as
ability to analyse the pros and cons of each product, will give you the best outcome of potential savings with little investment of your own time.
Current vs New Features
While significant savings could be available with a new home loan, the current features of your loan could outweigh the monetary benefit.
These features can include access to 100% offset accounts, free additional repayments and redraws as well as a substantial branch network.
All these benefits need to be considered and reviewed to see if they are still required in your loan before you consider refinancing.
How Quickly Will the Savings Cover Refinancing Costs?
There is often a lot of time, effort and money involved in refinancing. Most industry experts believe that refinance savings should be recovered
in a maximum of two years from refinancing, though I personally like to target 12 – 18 months. Prior to looking at refinance options, it is best to go back to your current lender
and ask for a lower rate. If you do not like asking, then your broker would be happy to approach them on your behalf and request a lower rate, as the lender knows how quickly a broker will move to refinancing if a more competitive rate is not offered.
What Does It Take to Refinance?
If you’re looking to refinance your mortgage, your total time investment will ideally be a couple of hours, although initially as little as 15 minutes
for a phone call could identify if any savings can be achieved. While the refinance process may seem overwhelming, the broker’s role is to make it as efficient as possible.
If you would like to potentially save thousands per year with only a small investment in time, please contact me today.