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How to change your mortgage
Think very carefully before changing your home loan. There are many aspects to consider, and whilst a cheap interest rate is important, the right structure and features are also vital considerations.
The 3 main points to consider when deciding whether or not to refinance are:
- Decide what you need – list the options and features you want in a home loan and give each a score. This enables you to compare different loans.
- Talk to your current lender – to keep you as a customer they may agree to change your contract or switch to another loan structure without penalty.
- Add up the costs and benefits – you can use our loan calculator to compare the total amount payable on your current loan and other loans, but there are also other costs to consider:
- Termination fees/discharge fees
- Break costs
- Government charges
- Legal expenses
- Valuations
If you decide to refinance, there are many different types of loan to choose from:
- Standard variable loans
- Honey-moon rate loans
- Basic Variable loans
- Fixed rate loans
- Split/combination loans
- Equity overdraft loans
Costs to watch out for:
Try and negotiate with your new lender to waive or reduce as many fees as possible. Fees you may come across are:
- Mortgage discharge fee from your current lender
- Establishment costs with your new lender
- Mortgage registration fee
- Mortgage stamp duty (in WA and SA)
*This article was last reviewed July 2003
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