It’s probably inevitable that with a cash rate rise from the Reserve Bank and the subsequent interest rate rises on home loans – especially from some banks like the Commonwealth Bank whic hiked their rate by almost double the Reserve Bank’s increase – there will be home loan customers who are thinking about switching to a different home loan, hoping for a better deal.
In fact, news this week from mortgage brokers is that they have been flooded by home owners trying to find out if there is a better home loan deal that they can switch to in a refinancing deal. With some people suggesting that this is a good time to lock your mortgage in to a fixed rate, presuming that rates will continue to rise, and with the rates across different banks and other lenders varying more than usual, it is no surprise that plenty of people are investigating their options.
At the same time, other mortgage brokers are encouraging Australian home loan holders to be cautious about switching home loans. For a start, it’s vital to consider every different cost that is included with the changing over of a home loan, by asking both banks very clearly to define the charges both for leaving your current mortgage and starting a new one, as well as calculating any difference that the varying features of each mortgage might make to your back pocket over the remaining years of your loan. In addition, they say that it will take a few more weeks before every bank and home loan lender has really settled down in their adjusting of home loan rates and the various connected fees and charges, so you don’t want to get caught out by changing to a lender which appears better but doesn’t stay that way. In other words: exercise your right to change your home loan provider if you want to, but be really careful that you’re the one who benefits.