Raring to refinance? Be sure to do the maths.

Author: ME

Published at: 6/21/2016 3:29:00 PM


Raring To Refinance Be Sure To Do The Maths


Low mortgage rates can make refinancing appealing, but crunch the numbers to be sure the decision stacks up financially.


Home loan interest rates are hovering near historic lows and that can make it tempting to see if you could secure a better deal on your home loan. Refinancing to a cheaper loan has the potential to lower your monthly repayments but it doesn’t necessarily mean you’ll save in the long run.


The key to successful refinancing is to know the costs involved and weigh these up against the benefits.


So what sort of refinancing costs could you be facing?


Loan application fees – this is one to watch for. Some loans can charge upfront application fees worth several hundred dollars. This is an area where ME offers big savings with zero loan application fees*.


Ongoing fees – a low rate could mask high ongoing fees. Be sure to look at exactly what the loan will cost you on a regular basis by checking out the comparison rate. It takes into account initial and ongoing fees and charges. ME home loans can help you save here too, with no ongoing account-keeping fees.


Comparing loans can be hard. We make it easy with our  Loan Comparison Calculator. It does the maths for you, showing how much you could save by comparing different loan costs.


Loan discharge fees - you may be asked to pay some minor administration costs when you bail out of a variable rate loan. However it pays to take care if you’re refinancing a fixed rate loan.


Depending on how market interest rates have moved since you first fixed, you could be up for ‘break costs’. Only your current lender can tell you exactly what this cost may be and it’s something worth asking about.


What else to weigh up?


You may come across all sorts of rules of thumb that determine whether it’s a good idea to refinance. Some people recommend looking at how long it will take for the costs of refinancing to be recouped by any savings on the new loan. Others follow benchmarks like the size of any rate saving you could secure.


What’s often overlooked is a simple litmus test: Does the new loan offer features you don’t have at present? There’s a whole range of features that can help you pay off the loan sooner - and that’s when big savings really kick in.


To find out if refinancing is the right move for you, consider your goals and crunch some numbers. Easier still, talk to your ME Mobile Bank Manager.


*“Solicitor, valuation and agent fees may apply”.

Terms, conditions, fees and charges apply. Applications are subject to credit approval.