Refinancing your Geelong home loan can be an excellent way to reduce your monthly payments, secure a better interest rate, or achieve other financial goals. However, it’s essential to recognise that refinancing isn’t without its costs. At Konnect Financial Services, we’re here to guide you through the refinancing journey, ensuring you make an informed decision.
The price tag of refinancing – there’s more than meets the eye
While the allure of lower interest rates is enticing, refinancing comes with a range of fees that you should be aware of:
Discharge fees: Consider this your old lender’s ‘farewell’ gift. Discharge fees cover the administrative costs of closing your existing loan. Depending on your lender, these could range from a few hundred to thousands of dollars.
Application fees: Your new lender charges an application fee to process your refinancing request. This fee can vary significantly, which is why we research various lenders to find the best options for your circumstances.
Valuation fees: Lenders require a current market value assessment of your property, which can cost a few hundred dollars or more depending on your property’s complexity.
Government fees: Depending on your location within Victoria, you’ll need to account for registration fees and stamp duty.
Lenders’ mortgage insurance (LMI): If you’re borrowing more than 80% of your property’s value, LMI is likely necessary. This insurance protects the lender if you default on your loan.
Other fees: Don’t forget potential legal fees, title search fees, and other miscellaneous costs that could arise during the refinancing process.
Although the upfront costs may seem daunting, the long-term savings from securing a lower interest rate or shortening your loan term can significantly outweigh these expenses.
Debunking common refinancing myths
Refinancing is often shrouded in misconceptions that can deter homeowners from taking advantage of its benefits. Let’s set the record straight:
Myth 1: Refinancing is an administrative nightmare.
While the process does involve paperwork, it’s manageable. Our team at Konnect Financial Services can streamline the process, guiding you through the maze of documents and comparing loan options on your behalf.
Myth 2: Only those with a perfect credit score can refinance.
A good credit score is beneficial but not the sole factor lenders consider. Your income, employment history, and debt-to-income ratio also play crucial roles. Don’t assume you’re ineligible based on credit score alone.
Myth 3: Refinancing always leads to savings.
Not necessarily. It’s vital to compare your current loan with potential new ones, factoring in all costs involved. Sometimes, the savings may not be sufficient to justify the refinancing expenses.
Myth 4: Refinancing is a one-time deal.
You can refinance multiple times, but it’s essential to weigh the benefits against the costs each time. Frequent refinancing can lead to mounting expenses and may temporarily impact your credit score.
Factors to consider when refinancing
Refinancing is not a one-size-fits-all solution. Consider the following factors before making your decision:
Your financial goals: Are you aiming to lower your monthly payments, shorten your loan term, or tap into your home’s equity?
Length of stay: Refinancing typically makes sense if you plan to stay in your home long enough to recoup the closing costs through savings.
Interest rate environment: If your current loan has rolled over from a low to a high-interest rate, refinancing could help you save money.
Loan servicing: Unhappy with your current lender? Refinancing gives you a chance to switch to a lender who better meets your needs.
Access to additional lenders: Refinancing can open doors to a wider range of loan products, potentially offering more favourable terms or features.
Let Konnect Financial Services help you navigate refinancing in Geelong
At Konnect Financial Services, we take the time to thoroughly research your options, compare lenders, and crunch the numbers to see how much you could save. Our expertise can provide valuable insights throughout the process, making it easier for you to navigate and make an informed decision.
Refinancing is about achieving your financial goals. Get in touch and let us help you make a confident choice that sets you up for long-term success.
