If you’re looking to refinance your existing mortgage, it’s important to understand the potential pitfalls in the process. At Fox Mortgages, we’re here to help guide you through the process and make it as stress-free as possible.
With interest rates on the move, many people are shopping around for home loans. In January, external refinancing for total housing fell 2.1% but remained close to record highs at $18.6 billion. If you’re considering refinancing, there are six common mistakes to avoid.
Mistake #1: Only looking at the interest rate.
While a competitive interest rate is important, it’s not the only factor to consider when comparing loans. You may benefit from features such as an offset account or redraw facility, even if the interest rate isn’t the lowest available. An offset account can help you save on interest, while a redraw facility allows you to make extra repayments and still access the funds later.
Mistake #2: Not considering the comparison rate.
The comparison rate factors in the interest rate as well as any fees and charges, giving you a clearer idea of the true cost of a loan.
Mistake #3: Forgetting about the fees.
Don’t forget to budget for any costs involved in switching lenders, including mortgage discharge fees, mortgage registration fees, new application fees, and Lenders’ Mortgage Insurance.
Mistake #4: Being bedazzled by cashback offers.
While cashback offers may be tempting, it’s important to consider the big picture and whether the home loan is suitable for your financial situation and goals.
Mistake #5: Not investigating debt consolidation.
If you have multiple debts, consolidating them into your home loan may be beneficial in simplifying your repayments and potentially lowering your overall interest rate.
Mistake #6: Extending your loan term.
When entering into a new refinance loan contract a big mistake is extending the term out to 30 years. While the temptation can be to reduce repayments this could end up costing you thousands in additional intersest charges. Always make sure your comparison products are for the term of the loan you have remaining.
Mistake #7: Trying to go it alone.
Changing home loans is an important financial decision, which is why you need professional mortgage advice. We can guide you through the latest borrowing requirements and changes in the market to help you find the best home loan for your needs.
At Fox Mortgages, we offer a full range of mortgage options from more than 30 lenders. Our experienced mortgage team will work closely with you to find the right mortgage solution for your unique needs and financial situation.
Contact us today to chat about refinancing in 2023.