While refinancing should deliver the combination of flexibility, features and savings that’s just right for you, it’s important to ensure that the benefits will outweigh the potential costs. Here are some costs you may need to consider when refinancing.
Exit Fees and Break Costs
Also known as ‘early repayment fees’, ‘early termination fee’ or ‘deferred establishment fee’. Exit fees were banned on new
Some lenders charge a ‘break cost’ if you want to refinance while a fixed rate period is still current on your loan. If that’s you, check with your lender if break costs apply and what you might have to pay.
Your lender may charge a settlement fee for the payout of your current mortgage. This can also be called a termination or discharge fee.
Often called 'application', 'up-front', 'start-up' or 'set-up' fees. This is a one-off payment when you first start your loan.
When you switch from one home loan to another you may be asked to pay mortgage registration fees that let the State Titles Office know you’ve changed either your lender or the type of loan. These fees will vary according to your State or Territory.
The lender may impose a fee to have your property professionally valued. A valuation of your property helps lenders determine the current market value of your property and their willingness to lend to you.
Lenders’ Mortgage Insurance
If your home loan is worth more than 80% of your home’s value, your lender will ask you to pay Lender’s Mortgage Insurance (LMI). This insurance provides protection to lenders in case you default on your payments.
The amount you will be required to pay will depend on the size of your loan and is typically charged as a one-off premium, which you may be able to include in your overall loan amount.
While there are some costs involved in refinancing, don’t let fees keep you from your property goals. To find out more, speak to an Aussie Broker.