Tips for refinancing your home loan

What is refinancing your home loan?

Refinancing is when you change your home loan to better suit your situation and circumstances.

An Aurora Finance Group finance professional will discuss your options with you so that you can make an informed and confident decision about the most suitable lender and product for your situation. You won’t waste time applying to different lenders that don’t suit your needs and you won’t get unnecessary enquiries on your credit report.


Why do you want to refinance?

It’s important to be clear about why you want to refinance your loan. Is it because you want a more competitive rate? Have your circumstances changed and you want a more flexible loan? Do you want to consolidate debt? Do you want to expand your property portfolio and use your equity to fund the purchase of an additional home? Maybe the service of your current lender is an issue? Or, you want to make home improvements?


Consider the cost of refinancing

Refinancing can be costly so take the time to consider the costs.

Some of the costs for the new loan include:

  • Loan application or establishment fee
  • It’s highly likely that the new lender will want to value your property. The valuation fee may be included in the application fee
  • Depending on how much you borrow you may be charged Lender’s Mortgage Insurance (LMI)
  • You may be charged a document preparation fee
  • If you want to fix part or all of your new loan there may be a rate lock fee
  • There may also be a loan package fee with certain loan product

Some of the costs when you exit your current loan may include:

  • A discharge fee: this is payable to the lender when you exit a loan and covers the cost of preparing the legal documents and the lenders legal representative’s attendance at settlement
  • An exit fee: (break fee or deferred establishment fee) is designed to encourage a borrower to stay in the loan for a specified period usually 1 to 4 years and sometimes up to 5 years. If you exit the loan during this time the fee may be expensive.


Do your research

When you’re clear about why you’re refinancing, it’s much easier to eliminate the home loans that don’t suit. If the cost to refinance is greater than the benefit you’ll get, then you’ll need to consider whether the short-term cost outweighs the longer term gain.


Why should you refinance with an Aurora Finance Group finance professional?

When done properly, refinancing your loan can save you money and be an effective way to achieve what you want to do. Always consider the cost. The benefits in the long term should outweigh the short term costs. Because Aurora Finance Group is not a lender and doesn’t have loans to sell we’re 100% focused on achieving the most suitable outcome for you, not the needs of the lender.