MELBOURNE, Australia, May 6, 2022 (Newswire.com) - With talk of interest rate rises on the way, borrowers may be tempted to switch home loans while rates are low.
But it's important not to jump into a refinance without weighing up the costs, warns leading non-bank lender, Liberty.
Offering free-thinking loan options in the Australian mortgage space, Liberty works closely with borrowers seeking home loans to ensure that each customer receives a solution tailored to their needs.
When it comes to refinancing, borrowers need to remember that while moving to a new lender may reduce repayments and interest rate, it can also lead to a longer loan term.
According to Liberty's Head of Consumer Advocacy Heidi Armstrong, refinancing could actually lead to more repayments and the payment of more interest over the life of the loan.
"Before you decide to jump ship, make sure you do the calculations to ensure your short-term gain isn't long-term pain," she said.
Online comparison calculators can help borrowers to check how much they'll save if they make the change.
Depending on the existing home loan, borrowers can be up for some big fees if they move. Variable-rate loans often have low or no discharge fees, but leaving a fixed-rate loan can be costly.
It's important to also consider if the new loan has application or set-up fees on top of the new interest rate. While a lower headline interest rate is appealing, it's important to add up all the costs to make sure it doesn't end up costing more in the long term.
With a comprehensive understanding of home loan refinancing, a mortgage broker such as a Liberty Adviser can guide borrowers through the process to help them weigh up the options.
Approved applicants only. Lending criteria apply. Fees and charges are payable. Liberty Financial Pty Ltd ACN 077 248 983 and Secure Funding Pty Ltd ABN 25 081 982 872 Australian Credit Licence 388133, together trading as Liberty Financial. Liberty Advisers represent Liberty Network Services Pty Ltd ABN 65 151 158 628 Australian Credit Licence 408042, part of the Liberty group.
Group Manager - Consumer Communications
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Source: Liberty Financial