Will refinancing help you save on your loan costs?
With so many competing financial institutions offering an array of interest rates and a never-ending stash of incentives, how do you know if refinancing will save you money? How can you make the process easier and maximise your savings? If you’re considering refinancing, there are a few important points to consider.
Your five easy steps to help you save on your loan are just a mouse scroll away
- What’s your goal? Do you want access a lower interest rate or to combine all your loans with one provider? Perhaps you’ve seen a product that your existing lender does not provide?
- Watch for hidden costs: Exit fees or penalties may apply when you refinance or change your loan from fixed rate to variable. Since 1 July, 2011, new rules banning exit fees on new loans (variable loans) apply. Breaking a fixed rate before it’s due may still attract penalties. Always check out these potential costs before proceeding or signing anything!
- Choose the option that suits you. To help you find the best deal for you, it’s important to be looking at the right options. Before you begin your search, create a list of the features you require and discuss these with your mortgage broker/lending institution. This homework could save you hours of fruitless searching in the wrong areas for the wrong property.
- Select your choice. It may pay to go back to your existing lender and show them the product their competitor is offering you. They can only say no, we won’t match it [and then you’ll need to complete the rest of the refinancing requirements] or they may just say yes, we’ll match [or beat] this offer. Either way, you’re bound to save!
- Apply to refinance. Congratulations! You’ve decided on the refinancing option which should mean big savings on your loan costs. From here, you’ll need to complete an application with your chosen lender and they will guide you through the remaining administrative and legal steps.
As a guide, refinancing generally costs between 3 and 6% of your loan’s principal. Speak to your financial advisor before completing your refinance application.
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Property Friends is a specialist Property Investment Strategist that provides solutions for people aspiring to financial independence, choices in retirement, or leaving a legacy. www.propertyfriends.com.au (03) 9758 5331