How much will switching to a new lender cost you?
Refinancing can be expensive, so if you’re thinking of switching your home loan over to one with a different lender, you want to be sure that you’re going to get better value, in addition to better features and/or lower fees.
To help with this, the mortgage switching costs calculator gives you a rough answer to the following questions:
- How much will your new loan shave off your loan term?
- How long will it take to recover refinancing fees with your new loan?
- How much will you save over the course of your loan by switching?
Using this information, you can decide whether or not refinancing will be worth it for you. Simply get the information required from your current loan and enter in the relevant information required about the loan you’re thinking of refinancing to.
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How to use the mortgage switching costs calculator
To use the switching costs calculator you’ll need some information about your current loan and also the loan you’re thinking of refinancing to.
You’ll need to enter in your:
- Loan amount - This is the current loan balance you’re thinking of moving over to a new lender
- Repayment frequency - This is how often you make your repayments, and is used to give you a relevant repayment figure
- Loan term - This is how long your loan term will be when refinancing
For your current loan the information you’ll need to enter in includes your ongoing fees such as monthly and annual fees and the exit fee you’ll have to pay. If your loan still has an introductory interest rate enter in how long it still has and the introductory rate. Finally you’ll need to enter in the interest rate you’re currently paying.
Next, enter in the details of the loan you’re interested in refinancing to. If you haven’t found one yet start a comparison and find a loan which suits your needs. You can also look below for some loans to compare.
Once this information is entered in scroll down to the last section of the calculator. Here you’ll be able to see the long-term savings you’ll make over the course of your loan by refinancing to your chosen loan.
There’s a graph which will show you the amount you’ll save, and a table which displays the minimum repayments needed to pay this loan off in the time period you’ve set.
If you scroll down further you’ll see three summary boxes showing you:
- How much earlier you’ll pay your new loan off
- How long it will take you to recover the refinancing fees after your move to your new loan
- How much you’ll save with your new loan
Frequently asked questions about refinancing
Do I need to pay LMI twice?
Yes, unfortunately if your Loan to Value Ratio (LVR) is still over 80% when you refinance you’ll have to pay lenders mortgage insurance (LMI) again. In some cases, if you’ve only had your loan for a a couple of years of less your LMI provider might refund you part of the fee you paid. In any case you should ask.
This is overwhelming, who can help me decide if it’s worth refinancing?
A mortgage broker can be useful in this situation. They will help you compare home loans and work out how much you might be able to save by switching home loans. Because they receive a commission from your lender, they usually won’t charge you.
Why should I refinance?
It’s useful to refinance for a number of reasons. You might want to get a better rate on your home loan, get a home loan with lower fees, or get access to features such as offset accounts and redraw facilities which you didn’t have access to previously.