While banks are always happy to get your business, they aren’t always happy to see you leave. Because of this there are usually some fees associated.

So, the reason and benefit of refinancing must outweigh the cost.

Typically for a variable mortgage with most lenders it will cost between $600-$800 to switch loans. This is inclusive of the outgoing bank discharge costs and government charges.

This cost can increase if you currently have a fixed rate and want to change this loan. In this instance you may be subject to break costs. For accurate break costs you will need to speak to your current lender directly, and this is in addition to the changeover costs mentioned above.

Mortgage Rate Finder and Refinancer Paul will take the time to work out the specific costs to your individual situation and we will only present you with lenders that suit and fit your needs. We want to ensure we are putting you in a better position.

To make sure of this, we will do a full assessment of your situation and look at factors such as the rate, fees and charges, cash back offers or special pricing, to get the best deal from lenders.

On average people change their home loan every four to five years. But that doesn’t mean we shouldn’t check it every year. Once your loan has settled, we check in on the loan yearly to ensure you are getting the most out of your mortgage. This Home Loan Health Check makes sure that the rate and the product you are on is still meeting your needs.

Chris has an owner-occupied property worth $700,000 with a mortgage balance of $350,000 at 5.44%. The repayments are $2,820 per month. He also has a $10,000 credit card that is at its limit, with an interest rate of 14.99%.

Chris is making minimum repayments of $203 per month and isn’t paying down the credit card balance.

Chris has a car loan that started at $38,000 at 7.99% and is 2 years into the 5-year loan paying $770 per month and owes $24,585.

Currently, he is paying out $3793 per month in debts and struggling with his cash flow, plus not actually getting on top of the credit card or being able to save.

With his current credit card payments, if he stops using it and keeps paying $203 per a month it will take approximately 6 ½ years to pay it off and cost over $5000 in interest.

He would like to consolidate his debts in order to streamline his finances, lower his monthly outlay and close his credit card.

All of these debts could be refinanced into one new mortgage of $386,000 (including costs) and paid off over 30 years at 5.24%. The repayments would be $2129 per month. Just over half of his current outlay in repayments.

Depending on Chris’s circumstances this may not be ideal as it means that the home loan and car debt will now be paid over 30 years meaning he will actually pay more interest over the long term.

However, we could do a separate split for the car loan over 3 years at the new interest rate with the repayments now $752 per month and the combined credit card and the home loan would be $1991 per month (totalling $2743) still leaving him $1050 per month cash flow better than before.

Another thing worth considering is reducing the loan term. If he can afford the repayments, taking the loan over 25 years would reduce the life of the debt and the interest that would be paid.

If this scenario sounds a little too familiar, then it’s time to pick up the phone and call Paul.