Is it worth Refinancing
Today’s low mortgage rates make refinancing an attractive option for many
How do you know if it is the right choice for you?
Conventional wisdom says if you can save 1% or more through a refinance and plan to
stay in your home for 2 or more years, a refinance is well worth considering. This is a
good rule of thumb but depending on your particular situation, there are other things to
If you are thinking of refinancing, here are a few more questions to ask yourself:
Is your current mortgage a fixed rate home loan?
If you have a fixed rate loan, you usually have additional exit costs involved. These will
potentially outweigh the savings you will make by refinancing to a lower rate. As such,
you may want to forgo the costs of refinancing.
Do you have deferred establishment fees to pay?
Government changes came into effect last year on new mortgages, however most
existing mortgages at the time have retained this fee. The fees are normally payable up
to 5 years after settlement of your loan. The amount varies from lender to lender,
however in some cases it may be worth paying this to make a change.
Can you reduce the term of your mortgage?
Say you have a 30 year mortgage and have been paying it for 4 years. Depending on
your rate and balance, you may be able to refinance into a 25, 20 or even 15 year
mortgage with little change to your mortgage payment. By choosing this strategy, you
can save thousands in interest and pay off your home even sooner.
Are you concerned about your home’s value?
The housing market has left many guessing what their home is worth. Most refinances
require at least 10% equity to refinance.
As you can see, there are several variables to consider with a refinance. If you or
someone you know is considering a refinance please let us know first. We can give you
a personalised assessment of the options and best strategy for your individual
Any advice provided in this publication should be considered General Advice as it does not take into account your personal needs and objectives or your financial circumstances. You should therefore consider these matters yourself before deciding whether the advice is appropriate for you and whether you should act upon it.