You don’t need to move home to switch your home loan. But there are a few things to think about before refinancing your home loan with another lender. Here are some scenarios where refinancing may be a good idea.
Lock in a fixed interest rate
Or get the best of both worlds with a split loan – part fixed, part variable interest rate.
Consider your up-front charges
- Loan application (or establishment) fee – a one-off cost to set up the new home loan
- Valuation fee – to cover a professional property valuation
- Title protection fee – covers the lender for property fraud and other risks during the title transfer period
- Settlement fee – covers administrative costs involved with settling the loan
- Discharge, break, or exit fees – previous lender may charge this. Make sure you read the loan contract you signed with your previous lender so you’re across any such fees you might have to pay
- Government fees – such as stamp duty or mortgage registration fees
- Monthly loan fees or annual package fees for the new loan
- Risk Fees to protect the lender, such as Lender’s Mortgage Insurance.
Check if any risk fees will apply
Consider the impact on your credit score
Lots of things can impact your credit score, including when a credit provider obtains a copy of your report during your credit application. Whilst each of the Australian credit reporting bodies calculate credit scores differently, making multiple applications within a short space of time can negatively affect your credit score. Find out more about credit reporting here.
Make sure you're borrowing within your means
Seeing an enticing offer can make you want to borrow more than you need “just in case”, but don’t forget that variable interest rates fluctuate, and fixed interest rates have an end date – and you need to be able to afford repayments comfortably should anything happen.
Keen to know more? Your home loan is likely to be one of the biggest financial commitments you’ll make. Read our Ultimate Guide to Refinancing and decide if your home loan still works for you.
This article provides you with factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser. Neither Pepper nor its related bodies, nor their directors, employees or agents accept any responsibility for loss or liability which may arise from accessing or reliance on any of the information contained in this article. For information about whether a Pepper loan may be suitable for you, call Pepper on 13 73 77 or speak to an accredited Pepper Money broker.
All applications are subject to the credit provider’s credit assessment and loan eligibility criteria. Terms, conditions, fees and charges apply. Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.
©Pepper Money Limited ABN 55 094 317 665; AFSL 286655; Australian Credit Licence 286655 (“Pepper”). All rights reserved. Pepper is the servicer of home loans provided by Pepper Finance Corporation Limited ABN 51 094 317 647. Pepper Asset Finance Pty Limited ACN 165 183 317 Australian Credit Licence 458899 is the credit provider for asset finance loans.