Understand the costs of your new loan

When you refinance, you are applying for a brand-new loan, which means new paperwork and fees.

Depending on your lender, these may include:

• application documentation, settlement and handling fees

• property valuation fees

• mortgage registration fees

In addition, if you are increasing your loan size your new lender may require you to take out lenders mortgage insurance if your loan-to-valuation ratio exceeds 80%.

You can estimate the cost of lenders mortgage insurance on your new mortgage using this free calculator.

Be wary of refinancing into a “bells andwhistles” loan, which can come with extra features such as a free credit card or savings account (typically only free for the first year) but often attract a higher interest rate than the basic home loan.

If you are considering such a product, make sure it includes features you need and will actually use.

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