What Are the Hidden Costs of Switching Your Mortgage to Another Bank?
Moving your mortgage to a new lender can result in financial savings, but you will need to pay a couple of fees here and there in the process. The main reason for moving your mortgage from one lender to another is represented by the financial advantages you get from the new one.
A new lender can be more competitive as it can offer an attractive interest rate and payment term, and other accessible fees.
In this article, we will discuss the fees you will have to pay for moving your mortgage.
- The Cost of Mortgage Discharge
If you check your loan agreement, you may find if your lender charges this type of fee. Expect to pay anywhere from 150 to 500 dollars. Add to that some government costs and you will get to a thousand dollars. Discuss with your lender and see if you can get a discount for the mortgage discharge.
- Stamp Duty Costs
Like with any other type of document or contract, you may need a stamp. Stamp duty will cost you approximately 0.35 percent of your loan value plus GST. There are stamp duty calculators on the Internet so feel free to get informed on how much it would cost.
- New Application Fee
Moving your mortgage from one lender to a new one will require you to pay a new application fee. An application fee plus your mortgage registration may vary depending on the state you live in. Expect to pay both of them at a price ranging from 500 to 1000 dollars.
- Lenders Mortgage Insurance
The new lender will have to do a valuation of your property. If your property values less than you planned, you may have to pay mortgage insurance. This means that you may add two percent of the total cost of your loan to your mortgage. You can avoid this if your property is valued over eighty percent of your loan amount.
- Direct Debits
When you switch lenders, you may encounter some difficulties. A big problem is represented by the fact that you will have to manage debits from your account. If the process doesn’t go correctly, you may have to deal with cheque dishonour and over the limit fees.
- Fixed Rate Loans
Moving your mortgage can also mean that you may have to break a fixed-term loan. That means that your financial institution may have to charge you because you didn’t fulfil the agreed terms. You will have to pay a fee for this. That price will depend on the value of the interest rate for your fixed loan.
That fee will also be increased by the current interest rate plus the duration of the loan. It can cost you thousands of dollars, so be prepared financially.
Moving your mortgage isn’t easy, and it doesn’t come cheap. But, if the financial advantages of the new lender outweigh the taxes you had to pay for your old loan, then go for it. Companies like us NSW Mortgage Corp have very convenient rates for the average Aussie, so don’t be afraid to enquire with us today. You may actually get your hands on the mortgage of a lifetime by opting for our services.