the loan
The Age
Saturday March 12, 2011
THANKS to the financial stakes associated with mortgage refinancing, it's critical for borrowers to be vigilant throughout the decision-making process, says Glen Spratt, managing director of mortgageport.com.au. But doing so is a tall task for your average consumer, he adds."There are so many things to consider ... it's pretty easy to have an oversight and not think about something and then find out you have a problem later on," Mr Spratt says.A recent survey of 1000 mortgage industry employees by mortgage insurer QBE LMI found only 7 per cent of respondents perceived borrowers to have acquired significant product knowledge before sourcing a loan.The three key factors Mr Spratt advises borrowers to take into consideration concerning refinancing are the costs (which can include exit fees though these are to be abolished on new standard variable home loans from July lenders mortgage insurance and lenders legal fees to discharge the mortgage), the transience of interest rates and the effect recent credit policies are having on borrowers' eligibility for refinancing.Mr Spratt also highlights the tendency of many borrowers to be reactive (only considering refinancing to address bad debt, for example) rather than proactive in their approach to refinancing, even though a proactive outlook can yield a better outcome."Very few people refinance just to save money on their home loans," Mr Spratt says. "That's not saying they shouldn't do it but because it's complex they've got to go through a full application process and lots of paperwork they don't do it."
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