How Much Does It Cost To Refinance Your Home Loan

If you are among those, who have been avoiding Home Loan Refinance because the whole process seems difficult, tedious and costly too, it’s time to review your options. Refinancing is an effective way of securing a lower interest rate that would help you save every year and get you back on track sooner. However, like any other benefit, this too comes with a cost.

Here is a list of fees you should expect when opting for home loan refinancing, but it varies according to your loan and lender.

• Exit fees: If you had taken a home loan before 1 July 2011 and are willing to pay it out in full, you will have to pay an early exit fee to your existing lender. This ‘early termination’ or ‘early discharge fee’ recovers the loss of creditor incurred due to early closure. If you partner with an experienced mortgage broker in Brisbane, they might provide you not only the best deal for refinancing but also credit providers who may pay your exit fees on your behalf. An exit fee can be anywhere around $200.
• Break fees: If your existing home loan has a fixed rate of interest, then you may be charged a break fee for leaving your lender early. This covers the loss of the lender. A complicated algorithm is used to calculate the break fees, which vary from lender to lender.
• Application fees: You will be charged an application fee if you refinance your home loan from a new lender. A Refinance Mortgage Broker in Brisbane can negotiate with the new lender for a lesser application fee ranging from $0 to $1000.

• Monthly fees: You may be charged a monthly fee on home loans by some lenders.
• Annual Fees: Expect an annual fee of around $750 on home loans (varies as per lenders) that usually come with discounted rates and special offers. Some lenders do not charge an application fee or monthly fee if you pay annual fees. It might also cover some part or the entire valuation fees.
• Valuation fees: A valuation fee of $100 or more can be charged for conducting the valuation process of your property. This gives the new lender a clearer picture of your equity and smoothens the process of Home Loan Refinance.
• Registration fees: The State or Territory Government charges you with a registration fee for discharging your existing home loan and registering a new loan. This amount varies as per the location.
• Lenders Mortgage Insurance (LMI): If your equity is less than 20% of the property value or if you are borrowing more than 80% of your property value, you will be charged Lenders Mortgage Insurance or LMI when refinancing your home loan, irrespective of whether you have already paid your existing lender. A professional mortgage broker can help you connect with the best lenders that offer a great deal and might not charge LMI until the loan reaches 90% Loan to Value Ratio (LVR).
• Rate Lock fees: With a rate lock fee, you might be able to lock the deal with your new lender at a fixed rate of interest. This has to be done before the settlement of the deal. Sometimes your lender may waive off the fee for your business. It is usually calculated as a percentage of the loan amount and can add up.

Refinancing your home loan helps in making long-term savings. However, factors such as your property’s location, current home loan, equity of your home, etc., influence the fees you will have to pay. For better options that suit your needs and to avoid the hassle, partner with an experienced and qualified mortgage broker who will help you to factor in the terms and conditions applicable and avoid any unwanted surprises down the track.