Refinancing your home loan

We uncover the path to finding the best mortgage and making the most of your money.
 
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01 .Refinancing basics

Refinancing-your-home-LEAD

Recent spending statistics from the ABS shows that housing continues to take the largest slice from our budget for most of us. The good news is your biggest investment could also offer the most potential to save money, and you might be surprised at how easy it is to shave thousands from the cost of your loan.

We want to take you back to basics and give you a simple mortgage rate comparison that hopefully inspires you to find a better deal. However, we also want to point out that these are general examples only and you should consider your individual situation when making any financial decisions. If in doubt, it is always best to seek advice from a trusted financial advisor.

For more information on Your mortgage, see Borrowing.

Ask and you shall receive

The first step in securing a better deal on your home loan is to do some basic market research. This could not be easier these days thanks to online financial comparison websites. CHOICE provides a completely unbiased and advertising free site - Compare, Ditch and Switch - where you can compare most mortgages available on the market.

With a general idea of what’s out there, you can measure it against your own rate. A better interest rate is not everything on a loan, so if you have particular requirements (think redraw facilities, offset accounts), keep that in mind. However, at this stage all you need to do is be ready to call your lender with some numbers and tell them you’re thinking of switching to a better deal.

This can earn you a discount without really having to lift a finger. Lenders know what it costs to attract new business, so they should be working hard to keep you on board. If this doesn’t work and you decide you are not happy with your current mortgage, you can then ramp up your search to refinance with a new lender. It’s a win-win situation – either you’ll be setting yourself up to save some serious money or confirming you have the best available mortage product on the market.

Add up costs and benefits

Next you will need to consider some alternative products more closely, which will involve looking at any exit fees on your old loan, establishment costs and ongoing fees (as well as interest rates and loan features).

One way to do this is through a mortgage broker, which can come with some benefits. They may be able to talk you through your options if you’re unsure, and they should be able to provide you with a range of options. Just make sure they are a member of the Mortgage and Finance Association of Australia. Mortgage brokers usually only sell from a limited range of providers for a commission, so it’s still worthwhile to still do your own research and consider the broader market before signing up to a new loan.

Our past research on switching home loans has shown that the best savings are achieved by switching to a credit union or an online subsidiary of a major bank, which you can access on your own. The same research shows that exits fees and new establishment fees can leave you with costs ranging from a few hundred to a several thousand dollars, depending on your loan. Despite this setback, overall you can still end up far ahead. Discover some simplified examples of home loan savings based on recent data.

 
 

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