The latest RACQ Bank research revealed 40 percent of Queensland mortgage holders were looking to change home loan providers.
RACQ Bank spokesperson Lucinda Ross said it was important to assess cashback deals carefully in case they disguised higher interest rates.
“If you’ve had your home loan for a few years and you’re looking to refinance, you may be considering a lender with a cashback offer,” Ms Ross said.
“Some lenders are offering borrowers thousands of dollars to switch but, while quick cash may seem like a good deal, it can cost you much more over time if the new loan has a higher interest rate or additional fees.
“Do your research before refinancing. Look at the full package of any loan you’re considering, including a breakdown of repayments, fees and the total interest over the remaining term, and then see if the cash back offer is still worth it.”
Ms Ross said homeowners should consider the costs as well as the benefits when refinancing.
“There are many reasons homeowners may want to refinance, like saving money or time on a loan, however, it’s crucial to weigh up your options before signing a new deal,” she said.
“Make sure you understand all the details of the loan you’re considering, including any establishment and ongoing fees, as well as exit fees associated with leaving your current lender. If these add up, switching for quick cash could leave you much worse off.
“You also need to consider your loan to value ratio. If it’s 80 percent or higher, you may need Lenders Mortgage Insurance, which isn’t transferrable.”
Check your home loan options with RACQ Bank’s new Refinance Calculator here.
The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.
The information in this article has been prepared for general information purposes only and is not intended as legal advice or specific advice to any particular person. Any advice contained in the document is general advice, not intended as legal advice or professional advice and does not take into account any person’s particular circumstances. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives and needs.