Are you considering switching home loans? Have you found a better deal that could shave money and years off your home loan?
Shopping around and staying aware of current trends and deals is a great way to save money, but before you jump ship, make sure you understand the costs involved. You want to make sure you come out better off from your switch.
Here’s what you need to look out for:
Ask for a key fact sheet
You can now request that all home loan lenders give you their key fact sheets, which detail the terms of the loan in a set structure that is easy to read and understand.
The fact sheet will:
- Detail the amount you will pay off over the term of the loan;
- Estimate what your repayments would look like with a rate increase;
- Tell you how to repay your home loan faster, and;
- List all the associated fees and charges.
Example refinancing rates:
Early exit fees
While exit fees were abolished in July 2011, if you took out a home loan prior to this date, you could still be charged.
Contact your lender to find out if exit fees apply to you and if so, how much you will be charged.
If you are signed up to a fixed rate loan and you switch home loans, you may be charged a break fee.
You will need to contact your lender to find out how much, but in general, the more the interest rate has dropped since you first took out the loan, the higher the break fee will be.
While there can be fees involved when breaking out of your current loan, there may also be fees involved when signing up for a new home loan.
Check with the lender you are considering moving your home loan across to about all the set-up fees, then weigh up if you’ll still be financially better off.
Do your research
It certainly pays to keep an eye out for the best home loan deals in today’s competitive market.