I have written a lot about the importance of developing a relationship with your conveyancer so we can best represent your interests at all the major transitions in life.
However, when it comes to refinancing your property, it might be easy to forget that in many circumstances you’ll need your conveyancer again to ensure things transfer smoothly.
Given a recent forecast by a major bank that Australia has another year of stable interest rates before any rises, I thought it might be timely to share a few tips in case you’re tempted to exploit the market situation and move to a new lender.
What is refinancing?
Put simply, refinancing a home loan simply means moving from your current mortgage contract to a new one, typically with a new lender.
The process requires paying out the original loan and entering into a new contract for a new loan.
Most typically, a conveyancer gets involved if one of the parties involved in the loan has changed their name.
This is usually a woman who originally took out the loan under her maiden name but now has a new surname.
Compare apples to apples
An important thing to note, especially if this is your first time refinancing, is to pay attention to the comparison rate being offered by a potential new lender.
Headline rates are the ones advertised by lenders but the comparison rate is the one that irons out the quirks and differences between various condition and fee structures so you can compare apples to apples.
It also should be noted that although exit fees are mostly now prohibited, they may still apply to loans signed before July 2011 and there will most likely be other costs to take into account.
Equity, equity, wherefore art thou, equity?
One final observation.
In the wake of the global financial crisis and this period of economic uncertainty, you need to be mindful of your property’s current valuation. It is not unheard of for property values to have slumped in some suburbs.
If this is the case and your current valuation is much closer to your outstanding loan amount that you had expected, you will find yourself in a weak situation.
While the lure of better deals can be attractive, it doesn’t hurt to take a ‘conveyancer-like’ approach and be cautious of the devils lurking in the details.