Compare home loan options
Now that you know why you want to refinance your loan, it is time to look at your refinancing options. Thoroughly compare the new loan offers against your current loan, taking into account various aspects.
It is the lifetime of your loan. If you refinance the same home loan amount for a longer term, your monthly repayments will become lower. But you will be paying more interest over time. Consider all this when you are assessing your cost savings.
A rebate is a reduction in the balance of the loan. Compare the interest charges, fees and comparison rates to ensure that you have a good deal.
- Introductory or honeymoon rate
A discount on the standard variable rate is applicable for a fixed period, it is usually up to 1 or 2 years.
The annual rate of interest is expressed as a percentage, use it to calculate interest charges on your home loan balance.
The interest rate can change anytime on variable rate loans depending on the market conditions.
The interest on fixed-rate home loans will not change for a fixed period which can be 1 to 5 years.
Utilise the comparison rate to gain a comprehensive understanding of the loan’s total cost, including fees in addition to the interest rate. The comparison rate calculates the applicable bank fees for setting up the new loan along with the establishment and service charges.
Take note of ongoing charges like administrative and service fees that may be associated with your chosen home loan.
If you repay a fixed-rate home loan before the end of the fixed term, you will be charged exit fees or break costs (early repayment fees). The break cost is often calculated using the difference between the current interest rate.
Repayments will be calculated based on the amount you owe to the bank, interest rate and loan term. Your repayments will be lower if the loan term is longer, but you will end up paying more interest in the long term.