Refinancing: yes or no?

By Your Mortgage
You’ll probably save on your mortgage by refinancing if …
  • your break costs for your existing loan are low
  • your establishment costs on your new loan are low
  • your ongoing fees on your new loan are lower than for your existing loan
  • your existing mortgage has a relatively high fixed rate
  • the new loan has a relatively low fixed, capped or discount rate for the first year. Be careful, though. The following year’s rates might be higher than the average if you take an introductory rate loan
  • the possible new lender has a range of options you can choose when the introductory period is over
  • the new loan has good exit conditions and fees
Don’t move if …
  • your existing mortgage has a relatively low fixed rate
  • the break costs are relatively high
  • the new loan’s special rate is only for a short period (say six months)
  • the possible new lender only offers a limited number of options once the introductory period is over
  • the new loan has high exit fees or (to an extent) ongoing fees
Before you decide …
  • Work out what sort of mortgage you have now
  • See a loan officer to work out what you’d be up for if you pay out your loan early
  • Ask a loan officer what lower interest options they can offer you. Signing up new borrowers costs lenders money, so they’ll probably be prepared to give some ground in order to hang on to you
  • Work out the savings you’ll make through paying less interest, then take off your break costs, then your establishment fees