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Mortgage Refinancing Tips

Refinancing tips to remember

Although there are some upfront financing costs, you need to take a long - term view. They could easily be outweighed by the possibly thousands of dollars you'll save over the life of the mortgage.

1. Make sure the lower interest rate being offered is for the life of the mortgage and not just a honeymoon rate that reverts to a higher than normal rate after a certain period.
2. Compare all the costs of any new mortgage, not just the headline rates, because all mortgages have different amounts of application fees, ongoing fees and exit fees. Compare the features too – some are handy but don't end up paying for features you will not use.
3. Using comparison rates to compare different mortgages can help because the comparison rate will take into finance costs associated with the mortgage, not just the interest rates.
4. It also takes into account what the mortgage reverts to if there is a honeymoon rate or a Fixed Rate Mortgage.
5. Once you have done that, make sure there is really a saving, and that it has not all be eaten up in mortgage exit and set-up fees.
6. Make sure you can make additional repayments of your mortgage if you want to. Some lenders will not allow you to reduce your mortgage for several years, especially if you have a fixed rate mortgage.
7. With internet and phone banking, refinancing your mortgage is easy from the comfort of your living room. Since you've already gone through the process of getting mortgage approval you'll know the basic steps and you'll have most of the information you need readily available in your original mortgage documents.
8. Definitely avoid sending mortgage applications to lots of lenders in hope that one will say yes. This can reduce your credit worthiness.
9. In working out your loan affordability, factor in potential further rate increases. Nothing is worse than being caught 'unprepared'.

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