![\"Woman](\"https:\/\/i0.wp.com\/www.realestate.com.au\/blog\/wp-content\/uploads\/2017\/03\/10103451\/Filling-out-paperwork-2000x1500-1024x768.jpg?resize=1024%2C768&ssl=1\")
<\/p>\nWhile switching loans<\/a> can involve paperwork, it could save you more than $2000 a year. Picture: Kate Hunter<\/p>\n<\/div>\n Do you like the idea of lower monthly mortgage<\/a> repayments? All it takes is a few phone calls and some paperwork.<\/strong><\/p>\n Horton Van Dort, an independent mortgage broker based in Melbourne, says home owners who seek out a better deal on their home loan can easily save thousands. With increasing competition in the lending industry, the notion of regularly reviewing a mortgage and refinancing is now widely accepted.<\/p>\n \u201cIn the last 12 months to two years, I have seen a sharp increase in home owners wanting to find a better deal and save on their mortgage, as they understand there is more competition out there than ever. I\u2019ve done more refinancing in the last year than the last 10 years combined,\u201d he says.<\/p>\n Van Dort says home owners should review their mortgage at least every couple of years, if not every year.<\/p>\n \u201cIt\u2019s difficult to pinpoint how often, because the industry is constantly changing, interest rates are shifting, but it makes sense to review every year. The anniversary of your loan might be a good trigger,\u201d he says.<\/p>\n A change in the base interest rate by the Reserve Bank of Australia (RBA) \u2013 or by their bank independent of the RBA \u2013 often prompts home owners to\u00a0take a look around.<\/p>\n \u201cClients will often get a letter from their bank saying their interest rate is going up and that prompts them to call their broker, to see what else is out there. It\u2019s also possible for people to simply do a bit of online research about the interest rates out there, ring up their current lender and ask them to match it.<\/p>\n \u201cOn a $600,000 loan, over thirty years, on a 4.5% interest rate, finding a .5% interest rate saving is realistic in the current market. Switching would take the monthly repayment from $3040 to $2865, that\u2019s a saving of $175 per month,\u201d he says.<\/p>\n Over a year, that saves more than $2000.<\/p>\n Over the life of the loan, it would save more than $60,000, but Van Dort says home owners should focus on monthly savings, as much will change over the full life cycle of a loan.<\/span><\/p>\n Generally speaking, it costs between $800 and $850 to switch loans, he says, with both the old and new bank, and the government, charging fees.<\/p>\n Most lenders<\/a> will be willing to negotiate though, Van Dort says.<\/p>\n \u201cYou often see banks advertising they will pick up the cost of refinancing.\u201d<\/p>\n Van Dort\u2019s philosophy is to ensure refinancing is cost-neutral for his clients, although all brokers differ.<\/p>\n \u201cEven if you do a pay commission to a broker, the savings achieved will still leave you ahead,\u201d he says.<\/p>\n The other price is paperwork.<\/p>\n \u201cWhether using a broker or doing it yourself, switching does mean paperwork. It\u2019s a full loan application, so you need things like income details, statements and so, but once it\u2019s done, it\u2019s not hard to do again. Yes, it\u2019s a little bit of effort and for .1% interest rate, it might not seem worth it, but if you\u2019re looking at a .5% shift, it is.\u201d<\/p>\n
\n <\/p><\/div>\n [ad_2]How often should you look for a better mortgage deal?<\/span><\/h2>\n
How much does it cost to switch?<\/h2>\n
This information is of a general nature and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.<\/em><\/h5>\n
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