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Interest rates are getting lower.

Is it time to refinance? Should you refinance? It is always good practice to take the time to review your current loans.

Common questions that arise when thinking about refinancing:

My lender is charging me a higher home loan rate than I see advertised elsewhere. Can I change lenders?”

This is exactly the reason why most people change lenders. There may be a penalty clause in your current home loan, meaning you may need to pay a discharge fee, but it could still be in your financial interests to change.

When shopping around it is always important to look for the comparison rate of a product. A comparison rate is essentially the true rate, taking into account the fees and charges you will pay on the loan. So even though you see a lower rate it doesn’t mean the repayments are less.

“I have just come off a ‘honeymoon’ interest rate to a much higher rate. Can I move lenders or am I locked into my mortgage?”

You can walk away from most mortgages, although penalty fees sometimes apply to fixed rate loans.

If I move my mortgage to a new lender, is there anything stopping that lender from increasing their rates in a few months’ time?”

It depends what kind of product you have. If you’re concerned about rates and want steady repayments, perhaps you should consider a fixed rate home loan, where repayments are fixed for a period from 1 to 5 years.

“Why do some lenders charge more than others for lending the same amount of money?”

Banks and other lenders pay different amounts for the money they on-lend to you, they have different overhead structures and different profit expectations. All these factors affect how much they charge to lend people money.

“What documentation do I need to refinance?”

The last 3 – 6 months of mortgage statements is sufficient to begin this process. I can advise on any other documentation you might need.

If you really want to save money – it might be time to refinance.

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