What You Need to Know Before You Refinance Your Home Loan

"WHAT YOU NEEDTO KNOW BEFOREYOU REF INANCE

YOUR HOMELOAN"

LET 'S GETSTARTED

WHAT ISREF INANCING?

Ref inanc ing means sw i tch ing your loan f rom one lender toanother i n o rder to take advantage of bet te r i n te res t ra tes , loan

te rms o r mor tgage featu res . Ref inanc ing your home loan canof fe r you numerous benef i t s and save you thousands of do l la r s i nrepayments… but i t can a l so be ve ry r i s ky i f you don ’ t under take

suf f ic ien t research . I f you ’ re th ink ing of re f inanc ing yourmor tgage , he re a re some th ings you need to cons ider befo re

mak ing the sw i tch .

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Peop le dec ide to re f inance the i r mor tgages fo r anumber o f reasons , i nc lud ing (but not l im i ted to ) :

Get t ing a bet te r dea l o r ra teSwi tch ing between var iab le/f i xed ra tesFac i l i ta t ing home renovat ionsConso l idat ing ex i s t i ng debtsAccess ing add i t iona l home loan featu res

Some add i t iona l loan featu res that you might wantto cons ider sw i tch ing mor tgages fo r i nc lude :

Repayment ho l iday - I n wh ich you take a b reakf rom repayments o r reduced repayments to covercareer changes , b reaks o r unexpected f inanc ia lexpenses .

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Offset account - I n wh ich you have a sav ings o rt ransact ion account l i nked to your loan . The ba lanceof the l i nked account i s deducted f rom (o r o f f se taga ins t ) the ba lance of you r loan when the month l yin te res t charge i s ca lcu la ted .

F lex ib le repayments - Where you can make ex t rarepayments a t no add i t iona l cos t i n o rder to pay of fthe loan sooner .

F lex ib le rate opt ions - Where you can d i v ide yourra te between f i xed and var iab le components , o r evenmake in te res t -on l y payments fo r a cer ta in per iod .

Redraw faci l i ty - Where you can w i thdraw anyadd i t iona l repayments you have made on your loan .Th i s i s handy i f you ever need cash in an emergency .

Loan portabi l i ty - Where you can take your loan w i thyou when you move f rom one home to another w i thoutthe expense and hass le o f a r rang ing a new loan .

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Before you dec ide to re f inance , make su rethat you have thorough l y researched yourex i s t i ng loan and the loan you hope to sw i tchto , i n o rder to catch out any downs ides .Ref inanc ing i sn ’ t as s imp le as jus t f i nd ing aloan w i th a bet te r i n te res t ra te - you need tomake su re that you a re aware of a l l the cos t sinvo l ved and work out i f these outwe igh anypotent ia l benef i t s .

Wa lk ing away f rom your cu r rent loan wou ldl i ke l y i ncu r some upf ront cos t s , i nc lud ing :

Discharge feesRegist rat ion of mortgage feesBreak costs ( i f you have a f ixed rate loan)

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You w i l l then a l so have to pay the usua l feesthat come wi th open ing a new home loan ,inc lud ing :

Establ ishment feesLegal feesValuat ion feesStamp duty for your mortgageLender ’s mortgage insurance i f you have ahigh loan to va lue rat io (you may be e l ig ib lefo r a par t ia l re fund i f you have a l ready pa idth i s fo r you r f i r s t loan ) .

Once you have taken a l l these cos t s i n tocons iderat ion , you need to dete rmine whethermak ing the sw i tch i s wor th i t .

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Before you dec ide toref inance , ask you rse l f whyyou rea l l y want to do i t . We

suggest you make a l i s t o f a l lthe featu res that you need in

a home loan , and that youhave a c lear ‘p lan of a t tack ’i n m ind befo re you dec ide to

ref inance . Cons ider te l l i ngyour cu r rent mor tgage broker

that you a re th ink ing ofre f inanc ing - mor tgages a re

a compet i t i ve market , andbreak ing th i s news to your

b roker m ight i n sp i re them tolower your i n te res t ra tes o r

p rov ide you w i th newaddi t iona l featu res ( you

never know! ) .

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the bes t th ing you can dobefore mak ing any rash

dec i s ions i s to c runch thenumbers - cons ider a l l the

cos t s i nvo l ved and take somet ime to compare home loans

us ing a home loancompar i son ca lcu la to r ( to getan idea of potent ia l sav ings ) .We a l so suggest you speak toyour mor tgage broker and/or

a f inanc ia l p lanner befo reyou s ign any papers !

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