Hi there - long time lurker first time poster. Five years ago I took out a 20year mortgage, 90% fixed and 10% variable. The variable is paid off in full. I fixed the interest rate for 5 years at 4.5%. Given that fixed term is now coming to an end, am I free to seek refinance with other banks? Will there still be a “break fee” if I choose to go with another bank? Is there any difference in costs depending on when during your mortgage you choose to refinance? Thanks !
Hey Tex from Tassie! You certainly can refi with other banks. Just make sure the settlement date is just after your fixed rate comes off, as you will likely be up for fees due to the current rate differential if you break it before the final day. Refi's can take about a month (or more, depending on the bank) so it might time in quite nicely. What will your variable rate be when the fixed comes off? You might find it's quite a lot lower than your current rate if it's P&I.
1. Can't see why not. Also ask your current lender for their best offer before you refinance away. 2. There will be a discharge fee (generally around $200 - $300 depending on the lender) and possibly some fixed rate break cost if the fixed period hasn't come to an end yet. 3. If you refinance during the fixed period it can be expensive. If the loan involves LMI then it's generally not worth it to refinance. If your loan is sub 80% LVR and variable - you're sweet. Refi costs shouldn't be too much. Cheers Jamie
Thanks both, handy information to have. I’m under the 80% LVR (property worth 700k and loan 270). Not sure what my variable will be when the fixed term ends - i guess I am assuming there will be better offers out there at the time.
You will no doubt get a better deal - for some reason lenders are always look for new business and not doing as much to keep the current! Quite a few lenders also have a refinance rebate on eg $2000 which will definitely make up for the discharge fee (say $300) and titles office changes!
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