Switching home loans

By You and Money

It can really pay off to regularly review your home loan and ensure you’re still getting a good deal.

If you’re not happy with your current home loan, it’s worth considering switching to another loan or financial institution. Make sure that before you sign up with another mortgage provider, do your homework – make sure that the benefits of switching are worth the costs.

These steps will help you to shop and compare.

  • Check out the loans available from different banks and credit unions. Visit www.ratecity.com.au to compare loans across a range of lenders.
  • Once you have a list of potential loans, compare the interest rates, fees and features against your current home loan.
  • Inform your current mortgage provider that you’re considering switching. They may be able to offer you a different type of loan with a better interest rate or might reduce the interest on your current loan to keep your account.

Switching costs

You’re likely to incur fees if you exit your current home loan. There are now no exit fees on any new home loans taken out on or after July 2011. But be aware this ban doesn’t eliminate:

  • reasonable costs of closing the loan and discharging the mortgage
  • fixed interest rate ‘break’ costs; these may be several thousand dollars – your mortgage provider can advise if they apply to your loan
  • exit fees on loans entered into before 1 July 2011.

So ask your current mortgage provider what you have to pay if you switch – then work out if it’s worth it.

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