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Should you refinance for a better deal?

investors

With the latest drop in interest rates by the Reserve Bank, refinancing a loan can take advantage of lower interest rates to bring down the overall cost of servicing a loan. But it’s not always the best, or the only option.

There are many different factors borrowers need to consider when thinking about refinancing a loan.

The first step is to speak to us at Chardon & Abbott Home Loans about your needs and whether you can afford to service a different loan structure.

At this point, we will also need to find out about your existing loan, repayments and the structure of the facility.

The current value of the property is also taken into consideration, and we will have access to current data that will indicate what the asset is worth.

We will then have a look at the various loan options and figure out whether it’s worth it for the borrower to refinance. It’s not usually worth it if it only saves a couple of hundred dollars a year, taking into consideration exit and application fees. But if it’s going to save upward of $1000 a year, refinancing might be a sensible approach.

Another key consideration is lenders’ mortgage insurance (LMI). If switching loans means you will need to pay LMI again, sometimes it’s not worth refinancing.

If you want to refinance just to lower lending costs, ask us to negotiate with your existing bank for a lower rate.

If you do decide to go down the refinancing path, working with us rather than going straight to a bank has advantages because we have access to loan options from scores of different lenders.

We can compare many different lenders and, if there is a better opportunity, we’re able to access it and we always work to give you great advice that’s in your best interests.

If you’re trying to lower the costs of your loan, call Geoff or myself at our office on (02) 4731 5085.

Mick Chardon

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