Think before you leap!
June 30, 2015
Borrowers are advised to weight up options before deciding to jump ship to a rival home lender following the recent shake-up of mortgage rates.
The controversy sparked by the major banks lifting their lending rates well beyond the November official interest rate increase has stirred up inquiries about refinancing in the home loan market.
People considering changing their home loan provider need to investigate all the costs associated with refinancing and whether potential rate savings outweigh these costs, as it may take several weeks before all lenders put their interest rate and fee changes in place, including fixed rates.
When choosing a lender and loan product, people must weigh up pros, cons and needs, such as cost, loan features, service and reputation. There are an extensive range of safe lenders in Australia, from big banks, to smaller credit unions, building societies and non-bank lenders.
Although the Australian Securities and Investment Commission was cracking down on unconscionable fees, the smaller lenders did not enjoy the same economies of scale as the bigger lenders. Exit fees on mortgages help the smaller lenders to be more competitive; by allowing them to charge a fee only if the customer exits the loan within up to five years.
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