Trying to decide if refinancing is right for you? Switching lenders may offer benefits, but it’s important to be sure before moving on. Here’s how to find out if you’re ready to make the switch.
Sometimes, refinancing is spoken about like a magic-cure-all to our mortgage woes. In reality, all you’re doing is swapping your current home loan with a new home loan.
- Yes, it’s true that refinancing your loan may offer a range of benefits, but the main reasons most of us decide to switch home loans are a reduced home loan interest rate and improved loan features. Less money on your mortgage, more money in your wallet – that’s the goal here, right?
- If you’re tired of managing multiple debts, refinancing your home loan may offer a solution. If you can consolidate your debts into a single low rate home loan, you can avoid paying multiple sets of fees and interest rates.
What you should consider
It’s true that refinancing your home loan may provide potential benefits, but here are some factors you should consider before making the switch:
Costs – often, refinancing your home loan will come with costs you may not have anticipated, such as loan application fees for new loans, mortgage discharge fees, or break costs if your home loan has a fixed interest rate. For this reason, it may be worth your while financially to select your home loan provider wisely, looking for a track record of value and responsible lending rather than chasing lower interest rates year in, year out.
Lenders Mortgage Insurance (LMI) – You may be expected to pay Lenders Mortgage Insurance if you’re looking to borrow (refinance) an amount above 80% of your home’s current market value, regardless of whether you previously paid LMI when first purchasing your home.
If you’ve been tossing up the idea of refinancing your current home loan, it’s vital you arm yourself with as much information as possible. Take the time to use online tools, like our handy Home Loan Comparison Calculator, to see how your current deal stacks up.
For more information on refinancing, check out our handy How-To Guide, or start a conversation with your friendly, local expert Greater Bank lender today.
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