With an increasingly competitive market and low interest rates, you might be tempted to switch home loans.
Before you decide to jump ship, make sure you do the calculations to ensure your short-term gain isn’t long-term pain.
When you refinance, you take out a brand-new loan with another lender. Your repayments and interest rate might be lower, but this often comes with a longer loan term.
This means you’ll make more repayments and could ultimately end up paying more interest over the life of the loan.
To get the full picture, make sure you do the math. Online comparison calculators and tools like ASIC’s MoneySmart mortgage switching calculator can help you check exactly how much you’ll save.
Depending on your current loan, leaving your lender could cost you. While variable-rate loans often have low or no discharge fees, if you’ve fixed your rate – you could be up for some big fees.
Also make sure to check if your new loan has application costs or account fees on top of their shiny new interest rate. Remember to check comparison rates too. Every dollar counts, so it can help to get an expert’s opinion before you decide.
While a lower headline interest rate might seem appealing, it’s important to add up all costs to make sure refinancing is right for you.
A professional can help you navigate your options, so contact a Liberty Adviser today.
Most people feel overwhelmed when they think about changing their home loan, but refinancing doesn’t have to be stressful.