Should I Stay or Should I go? Is Refinancing as Easy as It Sounds?

There is a lot of talk in the media around people refinancing their home loans for a cheaper rate or better deal at the moment, and there is no doubt that there is something of a price war going on amongst the banks and non-banks.

The major banks have been flexing their considerable muscle for the past few years, with out of cycle interest rate rises and tightening of credit policy making money not just harder to get, but more expensive as well. We have seen politicians, consumer groups and the small lenders all attacking the banks over these issues, and public sentiment has once more turned against the major banks after the post GFC ‘flight to quality’ that led consumers to bring market share back to the majors to take advantage of the security provided by the larger institutions.

ING and National Australia Bank have recently offered to pay $700 towards the cost of refinancing from another lender, which is appetising but may not cover the government fees, discharge fess and settlement fees that are associated with a loan refinance.

The importance of a holistic approach to deciding firstly if you refinance your loan, and secondly where you move it to, is just as vital as the decisions you made when you first took out the loan. While having an attractive upfront rate, a cheap refinance option may have hidden upfront fees, poor or non-existent access to facilities like branches and ATMs, and high Early Repayment Fees (yes they still exist!).

If you are keen to move away from your current lender please call us to further discuss your options – we have all the major banks and many of the smaller and boutique lenders on our panel, and will take in to account all aspects of the loan, not just the interest rate, in advising on your refinance.

This article was written by Will Foster, Director of Property Planning Australia and first appeared in the INFRONT Newsletter distributed on the 25th February 2011

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