A major part of our jobs as mortgage brokers serving the Kwinana area is refinancing home loans. If you choose a mortgage broker who has access to a lot of lenders and can give you good advice, you can profit greatly from refinancing your home. However, there are many brokers who will let you dig yourself into a hole just so they can make a little bit of extra money.
Here are five mistakes that can cost you money.
Borrowing When Your Property Loses Value
When the market dips and your property loses value, it can reduce your equity. To compensate for this, lenders may raise your interest rate. In addition, your LVR or loan to value ratio can rise to more than 80%, at which point the lender will require Lenders’ Mortgage Insurance.
Forgetting about Exit Fees and Costs
Your current loan may still have exit fees and other costs when paying it off early. Make sure that you know them and take them into consideration. Make sure that it is worth your while to refinance.
Using a Fixed Interest Loan to Refinance
Lenders are no longer allowed to add exit fees to variable rate loans, but they can and do add exit fees on fixed rate loans. Most of these punish the borrower and provide a healthy profit for the lender. You can lose a lot of money this way if you aren’t careful.
Switching when Your Credit Record is Flawed
When your credit record is flawed, lenders will charge more interest. This raises your monthly repayments and total cost of the loan significantly. If you have an infringement, take care of it first and apply afterward.
Not Knowing the Comparison Rate
While the standard interest rate is the one everyone looks at, the comparison rate includes fees and lets you know the real cost of the loan upfront.
Bonus Mistake: Not Calling Smartline Rockingham
Don’t make the costliest mistake of all. Call (08) 9527 1800.