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Home Loans: The Right Questions to Ask

We’re always looking for way to save money, but one place where people forget to look also happens to be their biggest household expense: their mortgage. And I believe the reason why people don’t look closer at their home loan is because the idea of refinancing seems too difficult, too confusing, or is perceived as probably not worth it for the effort. If you’re one of those people, it’s time for you to come by our Pakenham branch and speak to one of our friendly mortgage brokers, but first, ask yourself some questions:

What’s my rate?

In my experience, many people know what their monthly payments are, but they don’t actually know their interest rate. Do you? Take a look – if it starts with a “5”, it’s time to shop around and our mortgage brokers can definitely help.

What does the market say?

Use a comparison site and find out what’s on offer. The current market for variable rate mortgages runs from high 3% to over 6%. Three-year fixed rate mortgages range from the low fours to well over 6%. There’s a lot of difference, which means there’s solid scope for savings There’s a lot of difference, which means there’s solid scope for savings.

What could I save?

Use the comparison sites to calculate several results. If you have a $350,000, 30-year loan with an interest rate of 5.24%, and you refinanced to a rate of 4.74%, you would save $107 a month and $38,480 over the life of the loan.

What must I have?

Have a good repayment record with your current lender and ensure you are not currently in arrears. Also, know that if you’re half-way through a fixed-rate loan you may be charged a break fee to leave. Make sure it’s worth it. At YBR Pakenham we can help you understand your credit history and weigh up the pros and cons of breaking your fixed-rate loan.

What are my other costs?

A new lender will likely charge upfront fees, and there may be some costs to exit your mortgage. Also, if you have less than 20% equity in your new loan, you’ll pay lenders mortgage insurance, which increases your costs.

Who do I see?

Go to a mortgage broker or approach a lender directly, and if you can’t make it to see us in person, then give our local branch in Pakenham a call. Mortgage brokers are refinancing experts who know how to streamline the process and find you the best rate available in the market.

How long will it take? What do I have to do?

Refinancing your mortgage doesn’t need to be a lengthy or difficult process. Our experienced mortgage brokers and loans managers can give you a quick run-down of the process, the application, the documents they want you to provide, and the time it typically takes.

Is it worth it?

You must answer this yourself. The total interest paid on a $300,000, 30-year mortgage at 5.6% is around $66,000 more than the same mortgage at 4.6%. You have to decide it this is worth the effort of refinancing.

If you still have any questions about your home loan or would like to speak to a mortgage broker about how you can save, then feel free to stop by our Pakenham Branch or give us a call.

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