Refinancing can change your interest rate, loan features, or repayments, but the advertised rate does not show the full cost of switching. You may need to pay fees to close your current loan and establish a new one. Some costs depend on your lender, loan type, property, and timing. Before you apply, ask both your current and prospective lender for a written breakdown, then compare the total costs with the likely benefits of refinancing.
Closing your current loan
Ask your current lender whether it charges a discharge or settlement fee to close the loan and release its mortgage over the property. The fee and process can vary, so request a payout figure and confirm how long it remains valid. Your conveyancer or solicitor may also charge for handling settlement paperwork, depending on how the refinance is arranged.
If you have a fixed-rate loan, check whether an early repayment or break cost could apply. This cost can depend on your loan terms and market conditions, and your lender should explain how it calculates the amount. Ask for an estimate before proceeding and confirm when the final figure will be available.
Setting up the new loan
The new lender may charge an application, establishment, or settlement fee. There may also be costs to register the mortgage or update property records. Ask which charges apply to your loan and whether any are paid upfront or added to the loan balance. If fees are added to the balance, you may pay interest on them over time.
Compare the new loan’s ongoing charges as well as its setup costs. These may include monthly account fees, package fees, or fees for optional features. Check whether the loan requires a linked transaction account or a particular repayment arrangement, and include any associated charges in your comparison.
Valuation and other checks
A lender may arrange a property valuation to assess the security for the loan. Ask whether the valuation is free or whether you will be charged, and whether the lender accepts an existing valuation. Other checks or services may also attract fees, depending on the lender and the transaction.
If you use a mortgage broker, ask whether you will pay a broker fee and when it is payable. Also check for government or registry charges that may apply to your circumstances. Do not assume every refinance has the same costs: request an itemized estimate and ask which amounts are confirmed, estimated, or still subject to change.
Compare the full cost
List each one-off and ongoing cost, then compare the total with the savings or other benefits you expect from the new loan. Consider how long you plan to keep the loan and how long it may take for savings to outweigh switching costs. A lower interest rate alone does not establish that refinancing will leave you better off.
Before accepting an offer, confirm the final fees, loan balance, interest rate, repayment amount, and any conditions in writing. Check whether the lender has included all costs in its comparison and whether a fee waiver has conditions. If figures change before settlement, ask for an updated breakdown so you can decide with current information.
Refinance costs can include charges from both your existing and new lenders, as well as valuation, legal, and registration expenses. Request itemized figures, check which amounts could change, and compare the total against the benefits you expect. Hobart Refinance Co can help you review the costs and loan options before you decide.