Refinancing - Worth It or Not?

Numpty21 on 28/03/2019 - 11:53
Last edited 29/03/2019 - 15:41

Hi Ozbargainers!

Just after some thoughts/advice from people on whether it’s worth refinancing my mortgage or not

Currently I have $170k remaining over 26 years but with extra repayments I expect to finish paying in 8 years (based on current repayments).

I can get a saving of 0.6% off my rate if I change but with all the additional costs I’m just not sure if it’s worth doing.

Total cost to refinance approximately $1,100 which will take me approximately 2.5 years to recover and that’s assuming that the rate reaming 0.6% lower.

Thx

Update
Thanks for all the feedback. I'm still considering my options but most likely i will refinance. I spoke with my mortgage provider again and they won't budge in the interest rate. Tossing up between Athena & Homestar,
Cheers

Financial Home Loan Loan

Comments

  • Hithere on 28/03/2019 - 12:07
    +10

    Maybe talk to a mortgage broker who would be a lot more qualified to give advice and could take into account your current personal situation.

      • Hithere on 28/03/2019 - 12:26
        +23

        Sorry to post something you don't like, next time I will give you the answer you want.

      • boomramada on 28/03/2019 - 12:29
        +9

        i have my current mortgage with Aussie and they are horrible to deal with, i won't be using a broker or asking for their advice.

        Well ask from a different broker.

        • Ace Ventura on 28/03/2019 - 12:34
          +4

          You add enough detail that it is specific to yourself and only yourself, then crack the sads when someone inevitably tells you to seek qualified advice.

          If you want general advice.
          Yes I found it beneficial when I refinanced my home loan.

          Do Aussie do home loans? I thought they were a broker, we used aussie too, but our loan is through ANZ. Aussie were great to deal with when we went through.

            • onetwothreefour on 28/03/2019 - 13:01
              +7

              @Numpty21:

              not cracking the sads just don't get why people on here have to reply negatively to posts, like i say if you don't like a post or have nothing valuable to add then move along and stop trying to disparage people.

              We could say the same about the way you are responding to these comments.

              • Numpty21 on 28/03/2019 - 13:09
                -3

                @onetwothreefour: i get your point, 1 of my replys above not appropriate,
                however slightly different context as i was replying to a comment not a post….2 rights don't make a wrong and i shouldn't have responded in that way

            • John Kimble on 28/03/2019 - 17:45
              +10

              @Numpty21:

              Maybe talk to a mortgage broker who would be a lot more qualified to give advice and could take into account your current personal situation.

              What is negative in the above?

        • Numpty21 on 28/03/2019 - 12:43
          -8

          @boomramada fair point, i could do that but i guess i just have a negative impression of brokers and would rather not

          • boomramada on 28/03/2019 - 15:55
            +3

            @Numpty21: You probably not sure how brokers are operate.
            Brokers got access to more than one product, they get a commission, you get access to compare then broker negotiate behalf of you. Sure you can go do by yourself, perhaps you can negotiate better with the bank than through broker.

            Your question is, Refinancing - Worth It or Not?

            Which depend on each individual case, not something you do every six months just because everyone here says yes. Only broker or bank can give you best answer.

            • SlickMick on 29/03/2019 - 14:18
              +1

              @boomramada: I'm with Numpty on this. A broker would have to have incredible ethics to say "don't refinance". And will never say check homestar or loans.com.au, or anyone they don't make $$ from.

              Why wouldn't a broker say "goto this bank, it will cost you a little more, but they pay me really well"

              I don't see what's hard about the OP doing the maths himself - he seems to have all the figures, then he just has to guess what current lender will do in future with interest rates vs the one he's thinking of going to, factor in the costs, and compare.

      • SlickMick on 29/03/2019 - 14:11

        mate you were doing fine up until the last line. I don't use broker's either. But it was quality advice all the same.

        and if you don't want to use a broker, it's probably because you have trust issues, same as me. Then you won't trust any advice here either anyway :)
        Just do the maths yourself

        My point of view is, don't do it. Unless you fix the rate, it's just a gamble. (If you do fix the rate, it's even more of a gamble.) WHoever you go to might be more expensive next year than who you left. Story of my life.

  • Typical16-bitEnjoyer on 28/03/2019 - 12:15
    +12

    Yes it's definitely worth it.

    You can trust me. I'm on the internet.

      • Nugs on 28/03/2019 - 12:38
        +29

        username checks out
        .

      • SlickMick on 29/03/2019 - 14:19
        +2

        lol sorry mate, once you get these guys offside, they'll neg everything you say.

        Even when you're right.

  • Topdog on 28/03/2019 - 12:16

    Worth it

  • arkie0 on 28/03/2019 - 12:30
    +2

    https://www.calculator.net/refinance-calculator.html

    Put new loan term as 8 years with lower rate but you have to compare that to 8 years on new loan at existing rate.

    Without knowing the rates, I think you will save approx. 5k

    • Numpty21 on 28/03/2019 - 12:39

      Thanks mate
      saving about $47 a month so probably worth it in the long term but that's assuming the rate difference remains 0.6%

      • SlickMick on 29/03/2019 - 14:27
        +5

        so total of refinance costs is $1100, and difference in interest is $47pm? Then if you're confident new lender will remain cheapest, you can expect to save $3412 over 8 years.
        As interest rates change, that will alter. Maybe next year, it will be profitable to come back to your current lender. But not as profitable as if you'd just stayed where you are.

        So you have all the figures, now it's time fro the gambling.

        btw I reckon you're right - I do not see how a broker could have helped you, unless you know one who's really good, which you obviously don't.
        (But the suggestion wasn't worth making all of ozbargain despise you!)

  • dasher86 on 28/03/2019 - 12:35
    +5

    Probably not worth it if it will take 2.5 year to recoup.
    The lender you're changing to may change their rates in that period.
    Only reason I would move if I could find a lender / broker to cover most of the finance costs.

  • altomic on 28/03/2019 - 12:51

    what is your current rate? and which particular bank are you currently with?

    • Numpty21 on 28/03/2019 - 12:54

      4.09%
      Aussie select home loan currently, but they have bump up the rates 0.3% in the past 6 months which is why i'm considering refinancing

      • SlickMick on 29/03/2019 - 14:30

        lol I've refinanced several times when I've had interest rates rise when others haven't. I've actually ended up back with the original lender, which is why I suggest only doing it if current lender has changed policy for the worse, or you find someone with a better policy that would indicate better rates ongoing.

        Doing things on principle only hurt you :)

  • ihbh on 28/03/2019 - 13:35
    +1

    Total cost to refinance approximately $1,100 which will take me approximately 2.5 years to recover

    $170k x 0.6% ~ $1k -> so you will recover in a little over a year.

    assuming that the rate reaming 0.6% lower

    Check what they've done with existing borrowers. Also, what are their exit costs?

  • Numpty21 on 28/03/2019 - 13:42
    -1

    thanks for the reply
    using the mortgage calculators the saving is approximately $47 per month so looking at 2yrs plus to break even.
    looking to change to Athena, as they are quite new too early to say what they will do with rate rises.
    exit costs…. good point i will check and compare, could make a big difference if i finish paying off the loan early (which i expect to do)
    cheers

    • ihbh on 28/03/2019 - 13:54

      using the mortgage calculators the saving is approximately $47 per month so looking at 2yrs plus to break even.

      repayments in the calculator consist of some loan outstanding amount and interest, hence doesn't reflect true saving.

    • chriskq on 29/03/2019 - 15:40
      +1

      pay it all off but $1 - have $1 in off set account - never get charged interest for the remaining mortgage period…

  • andmcg on 28/03/2019 - 14:49
    +1

    I just went through a refinance myself. I'd suggest going through a broker who will do most of the hard work for you (research, managing the project, paperwork, settlement, etc).

    The refinance was worth it in my case, but I owe a lot more than you. It cost me a little less than $1k, but costs vary between states, banks, etc.

    It sounds like you've done the research and it may not be worth it for you - at this time. You have to consider that you may change banks, then the new bank may raise their rates.

    Might be worth waiting and keeping your eyes out for a really good deal.

    • Ughhh on 28/03/2019 - 14:54

      I'd suggest going through a broker who will do most of the hard work for you (research, managing the project, paperwork, settlement, etc).

      If you were to go directly to another bank/lender, would you have to do all the paperwork yourself? No assistance from the new lender?

      • andmcg on 29/03/2019 - 12:24

        I imagine this would vary significantly between lenders. Some would probably be hands-on and assist you with everything. With my broker, he actually came to my house with the paperwork and helped me fill it out.

        A broker is usually on your side (in terms of wanting you to get the loan and getting their commission). This means that they might give you a few hints on what the bank wants to hear when it comes to your financial position. Nothing illegal, but maybe some suggestions on presenting your best self to the bank, ie, moving some money around, paying off credit cards, having a clear 3 months of solid savings, etc etc

        Using a broker doesn't cost you anything, so it's a win-win really. Of course they MAY lean towards whoever will pay the highest commission, but the good ones want you to come back to refinance again in 5 years, so will do what's good for you.

    • Numpty21 on 28/03/2019 - 14:54

      @andmcg1 thanks for the advice

    • SlickMick on 29/03/2019 - 14:36

      A broker is just a middleman. You can upload your docs online yourself, or give them to a broker to do it. I don't see a huge win there.

      I'm fine with using a broker. I have twice. Once because I couldn't find anyone that would lend for student accommodation, but a broker did.
      The second time I went to the broker to do a refinance, then asked could he do better because I'd found better rates myself. He couldn't, so I save a step and don't bother with brokers.

      If you use a broker, check who he deals with. That narrows your list down. Then you check the rest yourself.

      • andmcg on 29/03/2019 - 14:52

        As per my 2nd reply above, I think they offer a lot of advantages. Even getting some general advice from them could be a good idea. If you go to a bank, they are only going to give you information relevant to them. There's a lot more shopping around and calls and advice that you need to collect on your own.

        Very good point about it narrowing your list of lenders and packages however. Some brokers only use a few lenders, some use a lot more.

        • SlickMick on 29/03/2019 - 15:32

          yeah but none use all, so anybody who uses a broker and doesn't do their own investigation will never know whether they got the best deal

  • theHMASfriendship on 28/03/2019 - 15:04
    +2

    What did the bank and/or mortgage broker say when you asked them?

    • Numpty21 on 28/03/2019 - 15:34
      +9

      They said post on ozbargain

  • DJR9000 on 28/03/2019 - 15:05

    here's an alternative.

    Take said rate from refinancing and ask to speak to customer retention team or mortgage origination specialist from your current lender and see what they can do to match it.

    • Numpty21 on 28/03/2019 - 15:36

      Tried
      No go, they are not willing to reduce the rate

      • Some Guy on 28/03/2019 - 16:37

        That seems odd. Is this for an investment or a PPoR? If the latter, I'd refinance using a cash back if suitable.

        • Numpty21 on 28/03/2019 - 16:39

          PPoR

        • SlickMick on 29/03/2019 - 14:41
          +3

          Ubank raised their rates; I asked them to reconsider, they said nothing they could do. So I refinanced.
          Within a couple of weeks of settlement, ubank contacted me offering a rate that would have kept me, but too late. All I can think is a lot of people left, and they changed their mind about no-negotiation, or realised they needed to be more competitive. Too bad, so sad, you were late.

  • SBOB on 28/03/2019 - 15:48
    +2

    Total cost to refinance approximately $1,100 which will take me approximately 2.5 years to recover and that’s assuming that the rate reaming 0.6% lower.

    find somewhere with a lower refinance cost

    i refinanced to homestar a while ago at 3.54% and it hasn't moved, and their cashback promo covered most of my refinance fees

    They currently have a 3.49% rate (or a 3.54% with $700 cash back)
    even ubank is 3.59% and they dont have any ongoing or application fees

    you'll still have some fee's but likely less than the $1100 you're talking

    • SlickMick on 29/03/2019 - 14:43

      homestar was the one I started with, and ended up back with ~10 years later. Maybe they are good again now, or maybe they'll go rogue again!!??

      I think these non-bank lenders get there money from all sorts of places, and when it costs them more, their rates can become uncompetitive.

  • SmiTTy on 28/03/2019 - 20:36
    +1

    I was in anz the other day. They told me they are giving out some money for refinancing (from memory around 1 to 2.5k depending on size of mortgage).

    Don't know if they suit you or what their rates are but as above suggest a good mortgage broker would be best to give you that advice

    Ask for recommendations for good mortgage brokers rather than googling for one

  • backpaqer on 29/03/2019 - 08:31
    +1

    Ring up your current lender and ask what they can do for you seeing you're such a great customer (low risk etc). If they say nothing, ask them for a payout figure if the loan was discharged in 21 days time (about the time you could settle a new loan in) and that should wake them up.

  • dimitryp on 29/03/2019 - 09:43
    +1

    $1100 sounds a bit pricey for refinance. Discharge often costs $300, new mortgage reg costs $300 (govt charge), and then on top is any application fee/valuation fee from the new bank. There's good offers out there that charge $0 or near $0 for those charges (although maybe not for a low-value loan ($170k)).
    Either way, just calculate interest saved over 8yrs, and i'm positive it would recoup your remortgage costs.
    The last thing to consider is one's time, as doing to-and-fro with the bank can be very time consuming.

  • panorama on 29/03/2019 - 09:57
    +1

    They wont give you a better rate your mortgage is under 200,000

  • blwnhr on 29/03/2019 - 12:11
    +1

    We just refinanced through UBank, nil cost apart from exit fees from CBA. UBank are nil exit too so if we need to refinance then costs are reduced. This factored into our choice of lender for refinance. Our borrowed amount is low, under $150k, which makes lenders less inclined to offer good rates.

  • Numpty21 on 29/03/2019 - 12:21

    Thanks mate
    what rate are you on with UBank
    i checked and Variable rate of 3.74% p.a is the best rate from them.
    Was there any charge for settlement fee and valuation fee etc.

    • SBOB on 29/03/2019 - 12:52
      -1

      read their site…
      "There are no ongoing or annual fees to pay and no application fees on a variable rate home loan."

      their rate is also 3.59%, 3.74% appears to be one of their fixed rates

      • Numpty21 on 29/03/2019 - 13:00
        -1

        i did,
        3.59% is for loan amounts over $200k
        the fees i'm asking about are settlement fee and valuation fee ID check fees etc which are not identified but still apply

        • SBOB on 29/03/2019 - 14:06
          +2

          then refinance for over $200k and put the balance directly back into the mortgage

          these are pretty simple refinancing things to do

          i think you need to work on your people skills if you want to continue getting help/responses

    • SlickMick on 29/03/2019 - 14:46

      homestar, loans.com.au (and formerly ubank but maybe they're back??) I've found to offer the be best products at the best rates

  • [Deactivated] on 29/03/2019 - 15:23

    Do some homework on your new provider and see if they have a history of rate creep. If getting this on a new customer rate you may very well find your self back on the same or even higher rate after the first year.

    • bathuu on 29/03/2019 - 18:18

      Where do you find historical variable home loan rates for lenders?

      • [Deactivated] on 30/03/2019 - 01:31

        Not sure but even if you could it would be no good as that would only be for the advertised rate. Once you have a contract with a lender the advertised rate no longer applies to each individual.

        The best place to get a feel for rate creep is probably through an ozbargain or whirlpool thread.

  • blehgg on 29/03/2019 - 15:24

    Maths.

  • anonymous12345 on 29/03/2019 - 16:08

    I would refinance if it is 0.6% difference, I am already considering on a 0.1%. :p

    • Numpty21 on 29/03/2019 - 19:16

      depends on a lot of factors but 0.6% for me is 50/50 if it's worth it or not.

      if your loan amount is extremely large, no discharge fee on current mortgage and a cash intensive to change then might be worth it.
      But it's not just about getting a lower rate, consider the multitude of factors involved.

      Good luck

  • Viper8 on 29/03/2019 - 18:46

    You should refinance every couple of years to ensure you're getting a competitive rate. Just look at what the start-up banks are offering and if its considering lower than what you're getting at a major then that's a good indicator. Also there's often Whirlpool threads where people post their latest refinance figures with a particular bank which gives you a good base level.

    Also a sage piece of advice (which I'm going to cop a lot of criticism for): brokers are a complete waste of time unless you're extremely lazy. I've engaged a number of brokers from different companies in addition to more experienced self-employed brokers multiple times over the years (usually 2-3 at the same time to ensure I'm getting a good rate and wide coverage of potential banks) and whilst they always get you a rate far below the advertised rate, I've ALWAYS gotten the best rate myself by going straight to the banks home-loan retention team and quoting another banks lower rate.

    • Numpty21 on 29/03/2019 - 19:12

      Thanks mate and yes the Whirlpool threads are very informative.

      Ha ha i totally agree with you on brokers but got hammered on this thread for saying that.

  • conservative on 29/03/2019 - 19:10

    I would just pay the whole thing off quicker

    • Name on 29/03/2019 - 19:33
      +1

      Exactly! And why they're at it they should just get a better job too.

  • kanister1987 on 29/03/2019 - 19:57

    Westpac gave me $2k cashback and a 3.75% fixed rate for 2 years to move over to them.

    the $2k will offset you $1.1k costs and then some.

  • 10muscat on 30/03/2019 - 03:10

    HSBC seems to be having a better rates these days. Am thinking of switching to it… what else can i negotiate with them? Credit card fees or what ??

  • peterpeterpumpkin on 30/03/2019 - 08:36
    +1

    I just thought I should point out that websites like the stack exchange network are better for these types of questions. You get real-life representations of people that are concerned about their reputation. And there's topical arguments and often written justification and references.

    OzBargain has the benefit of being Australia focused, but the forums are mostly used for snarky comments and making political statements. More emotion than information. Even back in the day when you could get a serious response, it was often written by the same people, who can't be subject matter experts on everything.

    I gave up answering a few years ago when I noticed one topic that only had about 8 short, factually incorrect statements. You couldn't post an answer without then explaining that "everyone else is wrong or trying to deceive you", which would never happen on a respectable platform. Opinion is one thing, humour is another, but why do people even bother posting misleading information? I don't think there are that many 8 year olds on here…

    That's why those boring-for-everything-else car forums and mum's forums still have their place in Australia. Reddit does wit. OzBargain does retail bargains, moreso than serious money saving tips (like say, moneysavingexpert). Well, unless you subsist on meatless cheeseburgers.

    • serpserpserp on 30/03/2019 - 15:45

      who can't be subject matter experts on everything.

      I beg to differ ;)

    • [Deactivated] on 30/03/2019 - 17:34

      it was often written by the same people, who can't be subject matter experts on everything.

      On the Internet everybody is an expert on everything. :-/

    • Ughhh on 30/03/2019 - 21:20

      I think most people do want to help and have good intentions, but unfortunately, many don't realise that bad information or advice can do more damage than good. But who cares, it's not their problem in the end and it makes them feel like a hero.

  • Skramit on 30/03/2019 - 13:03

    Definitely worth it if you can get the new lender to r3duce the fees. Most can. Shop around.

    Many have unadvertised specials like “up to 3k in cashback for refinancing to cover fees”.

  • darkchoc on 30/03/2019 - 13:24

    Hey buddy.

    I have used www.loans.com.au in the past. Non bank lender with low rates and a track record of 6 years of having a really low variable rate.

    I have not had any experience with Athena or Home Star.

    If you're fully after lower interest rates, a good mortgage broker would just point you to the internet lenders and wish you luck. It's just not worth their time and cost to you!

    I'm not currently with loans.com.au as my finances got complicated, bit I always use them as a benchmark to see how the rates are. They have consistently been the lowest or within 0.2%.

    If you are seriously considering jumping ship, jump earlier to save for longer!

    Good luck

  • [Deactivated] on 30/03/2019 - 13:49

    Yes. I refinance or at least threaten to every couple of years. Last year I walked into the bank with a printout from canstar.com.au and the bank manager reduced my rate by 1.25% on the spot to keep my business. I stayed with them as a result so didn't have to pay transfer fees, all good.

    • OldBugger on 30/03/2019 - 22:14

      Ok I may try this. Which bank out of interest?

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