Refinancing my mortgage - How much does it cost?
The short answer is it costs nothing to get qualified help from a mortgage broker to evaluate your options.
The longer answer is, whether making a change to your home loan or refinancing from one lender to another, you could be expected to pay application costs, bank charges and statutory fees, and these costs vary from lender to lender.
As someone who keeps up with what’s happening in the finance market, it’s my job as your broker to make sure you're fully aware of what those costs are, what loan products suit your current financial situation and provide the information you’ll need to have handy to help you to weigh up your financing options.
The main costs you're looking at are government fees and your lender's loan discharge fees. But roughly what I find is that these fees usually come to around the $500-$600 mark as a typical cost to refinance from one bank to another. Sometimes it can be less. Sometimes lenders offer cashback incentives or they might give out reward points to offset the costs, so it depends on how you value these benefits.
Balancing the Pros and Cons of making changes
A large part of my job is to weigh up the pros and cons of those costs and outline the potential benefits from the options that suit your circumstances, such as whether you are likely to save a lot of money in interest. For example, it might cost you $500 to refinance today with a suitable option, but in the medium term, you’re likely to save money in interest payments, which could help you to pay off your home loan quicker, reduce your monthly commitment, or put that saved money towards your other financial goals.
I also look at the bigger picture, say, over three years, to evaluate the expected savings of changing home loans. At the end of the day though, there’s no point making a change unless it’s worthwhile.
While you may decide not to make changes to your loan right now, it is always a good idea to stay informed about what your options are in the current market.
So, to the best of your ability, stay informed, but there will be deals available that you might not be aware of. That's my job as a mortgage broker, being across 30 plus lenders, to be aware of what deals might be there that you're not seeing.
Safety in numbers
Banks are also more competitive in chasing new business rather than giving you the best rate as an existing customer. Sometimes existing customers will see a better interest rate being advertised by their lender for new buyers, but if you go to your own bank and ask for that rate, they can say no.
So, part of my job is to go back to that same bank on your behalf to see if they can give you that rate or the best they can before we look at changing lenders. I've had instances where I’ve actually been able to secure a lower rate than what the client went to the bank for in the first place. I went to that same lender through my channels and I got 0.2% lower interest rate for them, for the same product and same everything.
At the end of the day, the decision to refinance is all about weighing up the pros and cons of what your current lender can offer you, compared to what else is on offer in the market.
So let's just be clear, it doesn't cost you anything to speak to a mortgage broker to find out whether your current home loan is the best one for you at the moment, based on the panel of lenders I can access. You don’t have any costs until you make a change to your mortgage and sometimes it might not cost anything because all it involves is having a chat with your current lender to ask them if they can sharpen their pencil.
It's only when you change lenders or change the product that you might be at risk of having to pay a fee and at that point I can help you to decide whether or not that fee is worth paying to save you money over the next two or so years of your mortgage.
If you'd like help with assessing your personal and financial situation, as well as comparing the loans in the market to see if you're truly getting the right deal for you, then call Bob Malpass now on 0431 862 136, email [email protected] or send us a message via our website for a quick response.
Thanks for reading,