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Factors to consider before refinancing a home loan

Tue, 2008-04-15 20:47 — Broker

There are costs that can be encountered when refinancing a home loan that should be included in the calculation to determine the real cost benefit, and a break even point of time in the future, when the lower interest rate saving will outweigh the refinancing costs. Leaving costs

  • Mortgage discharge fee. Not all lenders charge this fee, but most do.
  • Early Repayment fee. Most lenders include this fee now, the amount varies and the term varies.
  • Deferred establishment fee is similar to early repayment fee
  • Lender legal costs

Entry costs

  • Lenders Mortgage Insurance. This can be the biggest cost of moving if applicable.
  • Application Fee. There are lenders who don't charge this fee or even refund the application fee after a certain term, most lenders do charge an application fee.
  • Lender legal costs
  • Valuation fee, some lenders charge customers for the cost of a property valuation, others don't.

Ongoing costs

  • Check that a new lower interest rate benefit is not offset by ongoing account keeping fees applied to the new loan

Intangibles

  • A new deferred establishment fee or early repayment fee could be encountered if the new home loan needs to be unexpectedly refinanced in the short term.

Also not considered at this stage are any benefits or negatives of a fixed rate loan or a variable rate loan. A prime example recently is a lender who regularly offered a larger discount off the standard variable rate than other lenders and has now increased their standard variable higher than comptetive lenders nullifying the additional discount previously offered. A finance broker equipped with advanced software systems can help to calculate the real costs and possible benefits of refinancing from your current lender. Ph 02 80024035 or contact a finance broker such as Ability Finance brokers now to find out more.




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