What are the costs involved with refinancing

Refinancing your home loan should not be a decision that is made lightly. There are many costs involved and these can sometimes outweigh the benefits you receive. The most important thing to remember is that refinancing does not make your debt go away. The difference you will see is in interest rate charged and monthly loan commitments.

Understanding the costs involved in refinancing your home should be an important part of your decision. The following outlines some of the fees involved in refinancing. Whilst this is a comprehensive list, your personal situation will depend on your current lender’s costs (ask for a copy of your loan agreement which will outline all the fees and charges payable) and your future lender’s costs.

Fees you have to pay when refinancing your home loan

Registration of mortgage fee
this is a State government based fee which your conveyance firm can confirm.
It is likely to be in the vicinity of $150.00.
Transfer of mortgage fee
this is a State government based fee which your conveyance firm can confirm.
It is likely to be in the vicinity of $150.00.
Legal fees
Factor in about $750 for your conveyancer or lawyer to refinance your loan. You should get a quote before you make any assumption of cost as there is a significant variation from one company to another depending on the service they provide.

Stamp duty
For straight refinancing of your loan, no stamp duty is payable, however if you borrower more than your original loan amount, you will have to pay duty on the additional amount only.

Fees you may have to pay when refinancing your home loan

Exit fees (charged by your current lender)Check your loan agreement for the amount payable.
The exit fees may also include discharge fee, break fees, document retrieval fee.
Loan application/establishment fee (charged by your new lender).
Obtain a quote from your new lender before signing your loan approval.
Lenders Mortgage Insurance (LMI)
Whenever you have less than 20% deposit, you will almost always have to pay mortgage insurance or LMI. This insurance is a one-off payment by the borrower to the lender (or lender's insurer) to insure the loan. It insures the lender for any short fall on a loan, so if you were sold up because of defaults, it covers the difference between what you are sold for and the amount still owing. As mortgage insurance is worked out on a sliding scale, you will need to ask your lender for a quote before you can budget for this cost. The higher amount you borrow, and/or the less downpayment you make, the higher the LMI becomes. If you have 20% or more deposit and all other factors are in line, LMI may be paid by the lender.
Lenders valuation fee
Your lender will expect you to pay for the cost of a valuation. The price is usually around 0.05% of the property purchase price.

The various fees and charges can be found at the State Lands Titles Offices

VICTORIA

Title Registration Services

Marland House

Level 10

570 Bourke Street

MELBOURNE VIC 3000

Telephone: (03) 8636 2010

Website: www.land.vic.gov.au

NSW

Land and Property Information

GPO Box 15