What is it?
Basically refinancing is taking your existing mortgage to another bank or lender.
Why do it?
People have varying reasons for refinancing although the main one seems to be to get a better deal. Others are simply unhappy with their current bank.
How much could I save?
Let’s use a loan of $400,000 as an example with 25 years remaining. If the current interest rate was 4.5% your monthly repayments would be approximately $2,223.
If this loan was refinanced to another lender with a rate of 3.75% (which is currently available) the monthly repayment would be approximately $2,057.
That is a difference of $166 per month or $1,992 per year.
Keep in mind also that extra $1,992 per year is making profit for your current lender.
How do I refinance?
Speaking to a broker would be a good first step. They can let you know if your current rate is competitive and if it will be worth refinancing. The best thing about it is a broker will usually not charge you a fee as the bank will pay the broker for their work.
If refinancing looks to be a good option then the broker will do all the leg work. You will just need to provide the documents to the broker that the bank request (payslips, bank statements etc).
Many lenders offer ‘Refinance Rebates’ where you could be reimbursed for your refinance costs. Generally we allow between $750 - $1,000 for refinance costs. Currently there are lenders offering rebates of $1,250 so this should more than cover any cost involved.
We regularly perform ‘Mortgage Check Up’s’ for our clients and are happy to extend this offer to Poms in Adelaide members.