5 refinancing myths, busted.

Traditionally, many borrowers would stay with their home loan lender for the life of the loan. Now that the mortgage industry is more competitive than ever, it's worth shopping around to avoid what's commonly known as loyalty tax. Don't let a somewhat daunting task deter you from reviewing your options, using a broker gives you a larger choice of lenders and more options to find the right fit for your current financial circumstances.

Myth 1: It's too costly to refinance

There can be costs, but they're normally far outweighed by the benefits. The interest rate is only one part of the equation, monthly admin fees and other charges add up over the lifetime of a loan.

The main cost that deters home owners is Lenders Mortgage Insurance. If you borrowed more than 80% of your property's value initially, chances are LMI was added to your loan. LMI is lender-specific, so if you refinance while the loan is still above 80% of the property's value, it may be levied again. Some lenders can provide a property-data report as an initial guide to your current home value, though each lender has its own valuation process.

Even with switching fees, a lender offering lower rates with little or no upfront or ongoing fees can deliver savings over the life of the loan that far outweigh the initial costs.

Myth 2: It's too much hassle

In most cases the process is complete in under a week or two. We're with you every step of the way, and most lenders are eager to win new borrowers, expect minimal paperwork: current loan documents, statements and income evidence, mostly digital.

Myth 3: A 0.5% rate difference isn't worth it

Any discount has an impact. On a $400,000 loan over 30 years, moving from 5.5% to 5.0% saves roughly $125 a month, close to $45,000 over the term. And the rate isn't the only lever: dropping a $495 annual fee to $299 (or zero), or gaining an offset account, free redraw and unlimited extra repayments, can each mean real money over time.

Myth 4: Fixed-rate borrowers can't refinance

You can refinance a fixed-rate loan, but you may incur break costs if your current rate is higher than today's market. Ask your current lender for the break-cost figure first, and make sure it doesn't outweigh the benefits, we'll run that comparison with you.

Myth 5: I was approved before, so I'll be approved again

A refinance is a fresh application. The lender reviews your current financial situation, the property's current value and the health of the loan. Values can fall as well as rise, and lenders don't always match a real-estate agent's appraisal. A property in poor repair, or new debts taken on since your original loan, can affect the outcome. Where possible, reduce debt before applying, or ask us about consolidating it into one manageable repayment.

Wondering what refinancing would actually save you? The refinance feasibility calculator shows your break-even point in seconds, or book a free review with Sara.