The refinancing process and costs

Refinancing may save you money but there are costs involved. It’s important to weigh up all the pros and cons, especially the costs compared to the financial benefits, to ensure that refinancing is right for you.

1. Understand the costs

There are costs involved in discharging your current loan and establishing a new one. Refinancing can be expensive if there are high fees and charges involved with discharging your current loan. Your Made For You Finance broker can help you evaluate the costs involved if you are considering refinancing.

 2. Choose the right home loan

Your Made For You Finance broker is dedicated to finding the right home loan for you. We can save you:

Time by coming to a place that suits you to discuss your refinancing needs

Interest by finding you a better deal on your home loan

Money by showing you different loan options and repayment scenarios that put more money back into your pocket

3. Apply to refinance your loan

After you have identified your new loan with the help of your Made For You Finance broker, the next step is to apply for your loan with your supporting documentation. Your Made For You Finance will help guide you through the process.

4. Approval and documentation 

The lender will then assess and process the application. Once your application is approved you will receive a Letter of Offer. Once you accept this and return it to your lender settlement can be arranged.

5. Arranging your settlement

Settlement is a process where titles are exchanged and your new lender registers a mortgage over your property. Your new lender will arrange for settlement after they received your signed Letter of Offer.

6. Drawdown your loan 

Congratulations! The refinance process is complete and your new home loan is in place.

Key costs you could face include:

Borrowing costs

When you refinance, your new lender may charge a range of upfront fees, including an application or loan establishment fee. Not all lenders charge all of these fees, and some may be negotiable.

Lender’s Mortgage Insurance (LMI)

If your new loan is for 80% or more of your home’s value, it’s likely you’ll be asked to pay LMI. To find out more about about LMI click here.

Exit Fees

Your current lender may charge exit fees, sometimes called ‘early repayment fees’.

Fees vary widely, although they usually only apply if you have had your current loan for less than five years.

Break costs for fixed rate loans

If you currently have a fixed rate loan, check if you have to pay ‘breaks costs’. A call to your lender will tell you if break costs apply and what you’re likely to be charged.

Mortgage registration fees

When you switch from one home loan to another you may be asked to pay mortgage registration fees that let the relevant land titles office in your state or territory know you’ve changed either your lender or the type of loan. These fees will vary according to your state or territory.

Could refinancing be right for you? Talk to us today