The process of moving to another lender, or refinancing, will vary depending on your own financial situation. Interest rates are often the key deciding factor for most people when comparing lenders for home loans.
When comparing interest rates you may see an advertised rate below what you are paying with Keystart, but it is important you include all the costs associated with setting up a new loan with another lender, including things like Lender’s Mortgage Insurance (LMI), fees and charges and of course how much of a deposit you need to have upfront in order to qualify for a loan with a new lender.
Interest rate comparisons
When comparing rates, be sure to ask if the rate has a set period, often referred to as an introductory or honeymoon rate. For example, it may be that a rate advertised runs for the first twelve months of the loan, but then reverts to the lender’s standard variable rate. You also need to check what loan-to-value ratio (LVR) the lender requires and the minimum loan amount to qualify for the rate.
Compare key facts sheets
To help consumers compare different lenders, all Australian lenders are required to provide key facts sheets, which include comparison rates on financial products. This is a very handy tool when comparing rates and home loans. You can view Keystart's key facts sheets under each of our loan products. View our loan products here.
Keystart’s interest rate
Keystart aims to provide a pathway into home ownership sooner with our low deposit home loans. Given the low deposit nature of the lending we provide, Keystart’s interest rates policy enables us to manage our lending risk responsibly whilst remaining focussed on our vision.
As of 1 November 2018, our policy is to adjust our interest rates by adopting the average of the standard variable interest rate of the four major banks, that is the Australia and New Zealand Banking Group (ANZ), National Australia Bank (NAB), Westpac Banking Corporation (Westpac) and the Commonwealth Bank of Australia (CBA).
Transition to a new lender when you’re ready
Unlike other lenders, Keystart is a transitional lender. This means we encourage our customers to refinance with another lender, when they are ready to do so. Some Keystart customers never refinance but the average time it takes for our standard home loan customers to refinance is between five to seven years.
When a Keystart customer transitions to another lender, we are able to help another person into home ownership.
How do you know when you are ready? When should you refinance?
We have prepared some points for you to consider, but the timing of changing lenders will vary between each person and situation.
The main factors to consider are
- Equity in your home
- Interest rates
- Benefits of a new lender
- Costs of a new lender
Benefits beyond the loan
Some lenders may be able to offer other benefits with a home loan, almost as a package. This may include credit cards, insurance discounts and offset accounts. Be sure to check all the conditions on these benefits and weigh up against your requirements.
Check carefully if any benefits come with a limited time, for example, a new credit card with a lower rate that may be offered for the first twelve months of the card only.
Costs of the new loan
Be sure to gather all the information on any fees and charges with the new loan. All lenders will be able to provide you with all the fees and charges associated with a home loan.
Doing your research into refinancing will assist you in making a balanced decision. You will need to weigh up what works best for you in your own situation.