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What to look for when refinancing

Oktay Sengoz

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25/10/2022

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1 min read

There are many reasons why you would refinance your home loan. The main reason is that you want to make sure you have the best deal. The best deal could mean having the best structure and best interest rate, but it’s not all about the interest rate. Some lenders may charge a higher interest rate, but allow you to borrow more, which could mean whether you buy any property and your dream property.

A lower interest rate will definitely save you money, but there are some mistakes that could cost you money even though you refinance your home loan to a lower interest rate.

Here are the things to look for when refinancing

Determine the main purpose for refinancing

You should determine what's important to you when refinancing. Is it to save money?, is it to redraw on your equity?, is it to reduce your repayments? There are many reasons to refinance, and each reason will have an alternative solution.

Interest rate

This is contradicting my point above, however it is important not to refinance to a lender that is charging a higher interest rate if your main purpose is to save money. The features of the loan are also important, i.e., an offset account will save you more money than a slight decrease in interest rate. Ensure the loan features are right for your situation.

Cost of refinancing

There are costs involved when refinancing. i.e., discharge fees, break costs and registration costs. Even though some lenders offer cash back offers to cover these costs, you should consider if you are out of pocket when refinancing. The costs may outweigh the benefit.

Loan term

It is important to match your current loan term when refinancing your mortgage. e.g., let’s say your existing mortgage has 27 years left to go, then you should match the loan term of the new loan to 27 years, otherwise you could end up paying more interest over the term of the loan.

Talk to us today to see how much money you could save by refinancing.

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