How much does it cost to refinance?

Given recent interest rate movements and a significant number of fixed-rate loans due to expire this year, refinancing is on many borrowers’ minds.

If you fall into this category, you may wonder how much refinance costs.

Let us break down typical refinance costs for you.

1. Mortgage application fee

If you’re switching lenders, you will likely have to pay a mortgage application or establishment fee. This covers the cost to your new lender of processing your application.

This upfront cost usually ranges from $200-$1000, depending on the lender and the type of loan. It may or may not include a valuation fee.

2. Loan discharge fee

Saying farewell to your current lender may result in a discharge fee for the administrative costs associated with terminating your mortgage.

Often loan discharge fees are around $200-$400. However, they can be up to $1000.

3. Property valuation fee

Your new lender may require a valuation to be done when assessing your refinancing application. The cost largely depends on the lender and the location of the property.

Valuation fees may range from $200-$600 in cities, and $600-$1000 in rural areas. Some lenders offer free property valuations.

4. Break fees

If you are on a fixed-rate loan, you may have to pay fees to break early. Break costs can be expensive and complicated to calculate. The easiest way to understand your break costs is to ask your current lender for a rundown.

5. Settlement fee

Remember paying a settlement fee when you originally took out your loan? You’ll be up for that again if you decide to refinance.

Settlement fees are paid to the new lender to settle the loan and typically range from $100-$400.

6. Mortgage registration fees

The land registry in your state or territory will charge a mortgage registration fee to register your mortgage on the title record for the property. The cost could be anywhere from $120-$210.

7. Exit fees

If your existing loan was taken out before July 1, 2011, you may be required to pay early exit fees with your lender. Check with them directly.

Let’s discuss your options!

It’s important to consider the long-term benefits of refinancing.

How much you could save by refinancing depends on the size of your mortgage, how many years you have left on the loan, how much lower the new interest rate is, and whether it has interest-saving features.

As your mortgage manager, we’re here to help you make informed decisions. We can help you weigh up the costs versus the benefits of refinancing and explain whether a different loan could better suit your financial situation and goals. Get in touch today.

Call 1300 780 440.