Today, mortgage refinancing is a common practice to secure a better deal on your home loan rate by switching to another bank or home loan lender.
If you have been with your bank for more than two years on a variable rate, the chances are that your current variable rate will be higher than you can get now as a new client with another bank. Banks tend to increase their variable rates (by not passing on the full interest rate cuts) and fees to their existing clients over time.
Most banks are prepared to offer very attractive rates to win new clients, so there is a good financial reason to consider refinancing.
Refinancing can be particularly effective when you have already made repayments on your original home loan and/or when the value of your property has increased. Preston Finance & Insurance will help you assess your options.
Speak with one of our mortgage brokers in Cairns to find out how much you can save through refinancing your home loan.
Why refinance a home loan
The main reason to refinance a mortgage is to save money. Over the life of a loan, you can potentially save thousands of dollars on repayments.
Typical costs to refinance a mortgage
Generally, when home loans are refinanced, the borrower can expect to pay:
- an application fee to the new bank
- a valuation fee, as part of the mortgage process.
These are what we refer to as “switch costs”. In many cases, however, banks are willing to waive or meet the borrowers switch costs to get your business.
How to refinance your home loan
Refinancing your home loan is always easier than obtaining your first home loan. This is because much of the work that you did to get your original loan can be simply updated and submitted to banks as part of a refinance application.
If you have had your current home loan for several years, you will have paid off some of the loan and/or the value of your property will have increased – this means that you are in a stronger financial position to borrow, and you’ll be able to access to better rates.
Home loan refinance comparisons
If you are considering refinancing, it’s essential that you research the home loan market to understand how competitive your existing home loan is, and what the alternatives are.
Preston Finance & Insurance in Cairns can do a thorough review of the home loan market on your behalf – most of the time, we can find a much better rate and terms than your current deal.
Speak to one of our mortgage brokers in Cairns today to find out how much you can save through refinancing.