How To Switch Home Loans

Home loans last for a long time. Something that worked for you five years ago might not be suitable now. If you stick with the same deal, you will have to tolerate a less-than-ideal situation, but if you switch you might be able to save some money. However, this isn’t a decision you should take lightly. Here are some tips that can help with the process:


  1. Approach Your Current Lender First


If you’re satisfied with the lender’s service and only need assistance on the loan, it might be a good idea to discuss this with your current lender. If you tell them you intend to switch, they might provide a better loan offer, better interest rates, and other facilities.

This can help you avoid the hassle of changing loans completely. Do a home loan comparisonwith other alternatives available in the market for the best results. You should also ask the lender for a Key Facts Sheet.


  1. Compare Different Options


Look at the different loan options available by comparing key factors. During a home loan comparisonprocess, you must consider factors like:

  • Interest rates
  • Type of interest rate
  • Type of loan repayment
  • Loan fees
  • Loan repayment terms
  • Features and benefits offered by the lender

It is also a good idea to compare the reputations of different lenders and their customer service. This is especially relevant if you’re not comfortable with the level of customer service offered by your current lender.


  1. Calculate the Cost of Home Loan Switch


After you have completed the home loan comparison and have gotten the key facts sheetfrom different lenders, calculate the cost. Switching loans isn’t cheap, but sometimes the additional expense is worth it due to long-term benefits.

  • Exit Fees – If you have taken out a loan before 1stof July 2011, you might have to pay exit fees. Lenders aren’t permitted to charge an exit fee on loans post 30 of June 2011. You might have to pay a break fee if you have a fixed rate interest loan.
  • Lender’s Mortgage Insurance – You might have to pay this insurance amount if your loan is in excess of 80% of the home value. It is a good idea to develop some equity before switching to a new lender.
  • Length – Some lenders will only accept a switch if the replacement loan is of 25 to 30 years in duration so you must consider the loan term carefully.


If you want to know more, don’t hesitate to contact us at Home Loan Comparisonon 0419 856 669.

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