30 November 2015 Refinancing myths dispelled It seems that these days borrowers are taking greater control of their finances by shopping around for the best deal when it comes to their home loan. Traditionally, people have stayed with the same lender for the life of their loan but in recent times, an increasing number of people are exploring their options, such as refinancing to meet changing personal circumstances. Refinancing can be a fairly straight forward solution that could save you money and/or years off your loan or simply ease the burden of high repayments. If you are considering refinancing your home loan, there are a number of myths that need to be dispelled…… Myth 1: It’s too much hassle to switch home loan lender Refinancing your mortgage can be daunting, however, most lenders are only too happy to work with customers to explore their personal needs and restructure a loan to better suit the individual. Often lenders can help set up a direct debit for new home loan repayments from the same account existing repayments are made from so there is no need to set up new a deposit account. Myth 2: It will be costly to refinance Refinancing your loan may not be as costly as you think with exit fees being abolished by the government on 1 July 2011. However, this only applies to loans which were established after this date. While some loans will incur exit fees and other costs, it pays to do your homework as lenders offering cheaper interest rates, reduced or no upfront fees and charges may provide greater savings over the life of the loan and outweigh any fees incurred. Myth 3: I am stuck with home loan for life Borrowers often think they are locked into their home loan for the term of their loan because of high exit fees and other associated costs. Many people do not take the time to understand the conditions of their loan agreement and that these conditions change over time. For example, there may be an early repayment fee or exit fee (if applicable) if you discharge from your loan within the first few years to recover the costs of establishing the loan. However, these fees are usually reduced to zero after three or four years - making the switch easier. Before deciding whether refinancing is right for you, it is a good idea to speak with a home loan specialist.