Refinancing can be frustrating, especially when it comes to reviewing your existing mortgage and then comparing this to others on the market. But, if you don’t think you’re getting ahead financially or that your existing lender isn’t offering you the best possible deal, then it may be time to look for a better mortgage.
To refinance and find the right mortgage for you, you need to consider the following aspects:
Long-term financial goals – For refinancing to be viable you need long-term financial goals. So, if you’re staying in your home for more than 5-years, then refinancing is possibly an option. But, if you’re looking to move in the near future, then refinancing could be costly.
Financial needs – Always consider your existing and future financial needs. For example, if you’re seeking to consolidate debt or want to use the equity in your home to buy an investment property, then consider the most affordable option to do this. Look at all costs before making a move. Consider application and ongoing fees, stamp duty and legal costs, as well as exit fees from your existing mortgage.
Interest rates – Most financial experts recommend that when refinancing you seek to find a mortgage that is 1 percent or more lower in interest than your existing mortgage. This then makes refinancing viable. Refinancing for an interest rate that is less than this may not be cost-effective.
Fees and charges – Before refinancing, work out how much it will cost you. Factor in stamp duty, which is payable only if you change names on the mortgage or if you borrow more than your original loan amount, mortgage title transfer and registration fees, legal fees, exit fees and ongoing charges. Just remember that some states have different rulings for government fees. Some charge a percentage of the property value, whereas others charge a flat rate. To calculate government charges visit the eChoice Calculator.
Savings – Work out what you’ll save by refinancing. Do the math for 1,2,3 and 5-years, as well as 10, 15 and 25-years.
Options – Discuss your options before you refinance. Talk to your existing lender and to a mortgage broker. Work out what options you have and which are best for you.
Making a decision – Think about refinancing long and hard. Weigh up the pros and cons before making a move. Don’t rush into anything. Crunch the numbers. Know what you’ll save, what you’ll gain, and what you’ll lose.
Seeking to refinance, but don’t know if it’s right for you? Take the guesswork out of refinancing! Discuss your options with eChoice and find the right home loan for YOU today.
Written by eChoice