Stopping a Mortgage Refinance Application at The Last Minute - Are There Fees Involved?

Lunarboogie on 27/05/2021 - 18:54

Hi brains trust

I recently attempted to refinance my loan from one Big Four to another to get a better rate.

My application had been accepted by the new mob and I signed the mortgage docs. As part of the final step, I sent a discharge form to my current bank to switch over. The retention area of my current back then immediately counter-offered with a better rate and so I am thinking of staying with them. I'll save thousands.

But I haven't told the the new mob yet because I am worried they will slug me fees (they're a Top 4 bank a bank after all). The mortgage hasn't settled and I am technically not a customer, other than setting up a bank account with them.

Does anyone have a similar experience and can advise?

Many thanks.

Financial Home Loan Loan

Comments

  • oscargamer on 27/05/2021 - 19:00

    You will have to ask the (almost) new bank

    The devil is in the detail

  • Drakesy on 27/05/2021 - 19:00
    +1

    I wouldn't stay with the same big 4 mob solely for the fact that they could've placed you on the cheaper rate from day 1 and they chose not to. It took you to threaten to leave for them to actually do something.
    Would leave a sour taste in my mouth ethically.

    But i guess if it's cheaper than the new bunch you might have a case.

    • squidz on 27/05/2021 - 19:18

      it's all the same with power company etc… when u churn.. they hit back with a new rate to retain the customer..

    • Mechz on 27/05/2021 - 21:19

      Yeah but more dollars in your pocket is always the better outcome. OP may not have called his own bank to see if they would match it, which they often will.

  • hentabara on 27/05/2021 - 19:22

    Call the new bank, and ask if there is any fee, and ask them to show in which part of the contract it is written.

    • Lunarboogie on 27/05/2021 - 19:35

      Thanks - good tip.
      There is nothing about this in the contract, other then the fees relating to setting up the new mortgage (which was about $650). Though is this applicable if the mortgage has never settled?

      • jpl on 27/05/2021 - 19:56
        +2

        When you apply for mortgage, there are two parts where you sign the papers.

        1. When you apply, If you withdraw after signing here, some bank is fine and some bank will charge you valuation fee.

        2. When it is approved and you accepted it. If you withdraw after signing here, most likely you will have to pay for the setup fee and early termination.

        The best way is politely tell your new bank that the current bank has counter offer and they are willing to absorb any fee incurred, ask the new bank to match the counter offer. No point staying with the old bank.

  • MS Paint on 27/05/2021 - 19:26

    I'll save thousands.

    In the short term or over 30 years?

    • Lunarboogie on 27/05/2021 - 19:32
      +4

      Thousands in the first year alone. I can extrapolate that over 30 years but that's not a useful exercise as it would depend on the movements of rates of both banks and the relative difference. None of which I can predict at this point in time.

  • onetwothreefour on 27/05/2021 - 19:43
    +3

    Tell the new mob you have a better offer and ask them to match it or better it, if they won't stay with the same bank.

    • onetwothreefour on 27/05/2021 - 19:44
      +3

      Also if you can save thousands in the first year you either have a really big mortgage or you were on a really bad interest rate.

      • Pelicannn on 28/05/2021 - 23:34

        Well 0.1% is roughly $60 a year on every $100,000 part of a home loan. I'd assume thousands means at least two of them so $2,000+ saving. if OP has a mortgage of $1,000,000 and the rate is dropped by approx 1/3 of a percent OP would technically be saving thousands (just). The average Australian mortgageb is around $500,000 so that would need a 2/3 of a percent drop to save similar amount (quick math).

        If OP is average, OP definitely has terrible current rate for them to consider dropping that much. If OP is not average, I infer that OP probably has nice house or 1Br unit in Sydney.

  • Lunarboogie on 28/05/2021 - 17:34

    So here's the skinny. I let the new bank know that I am not leaving my current lender and they politely withdrew my application. Simple as that.

    It might have been a different story had I gone through a broker.

    Hopefully this is a lesson to others.

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