Is it a good idea to refinance and is it worth the hassle?
The good
The benefits of switching at the time of writing this, includes cash incentives. Most banks will give you a bribe to switch over, this can be close to 1% of the loan amount. Each bank has its own approach to this, so its good to check with a good adviser like ourselves. Currently most banks need to you to have more than 20% equity before getting cash incentives and special rate discounts.
Products can be better at some banks, such as an offset home loan. Or the ability to lock rates 2 months in advance and cancel with minimal fees.
Pro tip – if you have more two or more properties, it can be smart to consider protection and tax optimisation in the switch. Such as does the banks have too much security? Should we freehold one? Also is the ownership giving you the most optimum tax structure? This is where a good adviser like us can connect with your accountant to consider other implications.
The bad
It will be a pain to switch banks, there is a little bit of work involved. Costs can also include, break fees, lawyers fees and possible cash back or adviser fee pay back. Especially if you have been with the current lender for less than three years.
Most banks currently require you to switch your main transactional account to them. Some have a switching service to make this easier(moving auto payments). But it can be annoying to have to changes everything (think eftpos cards).
Pro tip – not all banks have the same approach to refixing rates and not all products work the same. You have to ensure you do not get surprised by anything in the new relationship. Some banks only hold a rate for approx 30 days on a reifx, others can do 60.
Talk to an adviser like us to ensure you can make the approach with the most amount of clarity.
