Negotiating a reduced mortgage interest rate or a cash contribution from a new bank

Refinancing can be a good way of negotiating a reduced mortgage interest rate or a cash contribution from a new bank. If you are thinking about refinancing, we set out some important considerations below:

1. How long have you had your existing mortgage? If you received a cash contribution when you first obtained a mortgage, the bank may require you to pay back some, or all, of those funds if you refinance within a certain period, generally 3 years. Make sure you check the timeframes before applying for a refinancing loan.
2. You may want to wait until your fixed rate is due to expire. Refinancing in the middle of a fixed term mortgage could make you liable for break fees, and in the current climate the interest rates on offer may be higher than the ones you are breaking.
3. Do you want a cash contribution or a lower interest rate? In some cases, the cash contribution banks will offer (often up to 1% of the total loan) can be converted to a lower interest rate instead.

4. Mortgage brokers can assist you with your refinance application, and at no cost to you. They are experienced in dealing with banks and can do a lot of the hard work for you behind the scenes. However, if you have good negotiation skills and don’t mind doing the leg work yourself, you can deal with the banks direct.

5. If you are concerned about having to transfer your existing automatic payments, don’t be. You can take a copy of your existing bank statement showing you regular payments to your bank and they will arrange the transfers for you.
6. You will need legal assistance to complete the refinance. We will arrange for a discharge and repayment of your existing mortgage and draw down of the new loan for you. Feel free to contact us for a no obligation estimate of the legal fees involved.
7. Don’t be daunted! Refinancing is a relatively simple exercise (unless your loan is tied up with business/trust loans or over multiple properties) if you’re prepared to do the groundwork.