Determining the costs of leaving your current loan

While the government has banned lenders from charging exit fees on customers switching out of variable-rate loans, this only applies for loans dating from July 1, 2011.

If you refinance out of a variable-rate mortgage dating from before July 1, 2011 or a fixed-rate mortgage before the fixed rate period ends, you will still have to pay penalty fees for breaking the contract with your lender.

Even if your variable-rate loan was originated after July 1, 2011, you will most likely have to pay a mortgage discharge fee of about $350 and legal fees of between $250 and $500.

There are also intangible costs such as ending a long-term relationship with your bank or lender, which might have included favourable terms and conditions – in the event that you are refinancing purely for a better rate.

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This article was taken from Property Observer's free eBook: 12 tips for refinancing your mortgage.