Traps to Avoid in Refinancing

Wanting To Refinance?

Here’s what you should be aware of –

Whether you’re after lower repayments or want to tap into the equity sitting in your home, refinancing can offer a world of benefit. However, there are a number of things you need to be mindful of, to ensure that your getting the necessary benefit.

Don’t be fooled by the interest rate

Finding a lower interest rate doesn’t necessarily mean you’ve scored yourself a better deal. In fact, a product with more features may cost you a bit more in fees or interest, but could save you more in the long run.
Features such as an offset account will prove valuable as it will allow you to make larger repayments or put any extra cash against the loan. Products without this feature may charge a fee for early repayments

Honeymoon rates are just that

Don’t be lured by offers with discounted introductory rates unless you’ve calculated the savings over the life of the loan. While a loan with a discounted interest rate may seem like a tempting offer, it’s only temporary.

Once the introductory period is over, the interest will revert to a higher standard variable for the rest of the loan term.

Be aware of the fees

One of the main purposes of refinancing is to lighten the financial burden, however, that doesn’t mean that it’s not going to cost you. There are many fees involved, which may include discharge and application fees, a valuation fee, land registration fee, and maybe even mortgage insurance.
While these cannot be avoided in most cases, you have to ensure that the costs involved are not higher than the savings, otherwise, you’re just walking up a hill backwards.

While there are traps to avoid, a little expertise can take the stress out of refinancing to save you thousands, fund that renovation, or simply find a loan that suits your life a little better.
If you have any further questions on what I’ve discussed in today’s video, please feel free to reach out to me directly!

Keegan Rezek
0451 668 673
Keegan@tlagroup.com.au