Home' Army News : February 3rd 2011 Contents NEW ADF INTERACTIVE
NOW DEPLOYED! www.adfcon
‹ Easy, accurate planning
‹ Battleground graphics & details
‹ Targeted at ADF personal & family finances
‹ Super-fast calculations
Who said finances are boring? This whole exercise will help all
ADF members and their families manage income and expenses,
create personal balance sheets, and understand progress towards
financial independence. Check it ou
Army February 3, 2011
home loan could
save thousands but
you need to weigh
up the associated
costs, according to
WITH interest rates on
the rise, you might be
tempted by advertise-
ments to make the
switch to a cheaper lender.
But be wary. You will normally
be charged a fee for breaking your
current home loan and a fee to apply
for the new home loan and you need
to work out whether you will recover
these costs by paying less in interest
with the new loan.
You can do this by using ASIC's
mortgage switching calculator, which
can be found at www.fido.gov.au
ASIC's mortgage switching calcu-
lator shows how long before a cheap-
er loan will be an overall saving after
switching costs, which loan will be
paid off faster; and how much can be
saved in minimum monthly repay-
If you are thinking about switch-
ing follow these four steps:
Find information about different
loans on comparison sites such as
www.RateCity.com.au or call a few
lenders and ask them for details of
their best rates.
Draw up a table with the interest
rates, fees and features of your cur-
rent loan and compare this with a few
other home loans.
Talk to your current lender and
tell them you are planning to switch
to a cheaper loan offered by another
lender. They may offer to reduce the
interest rate or suggest a cheaper 'no-
frills' loan. This could save you sig-
nificant switching costs.
Consider taking the best deal to
a mortgage broker, to see if they can
Work out what fees you will be
charged if you change loans. Use the
Mortgage switching calculator.
Brad and Jan have a $250,000
home loan with 20 years remaining
and are considering switching to a
loan with a 0.3% lower interest rate.
Their exit and entry fees total $700.
The calculator shows it will take Brad
and Jan 12 months to recover the cost
of switching. They could save $40 a
month in repayments or pay off the
loan 10 months earlier.
You will need to decide whether
the lower interest rate with a new loan
outweighs the costs of switching from
your existing one. The lower the exit
and start-up fees, the more you stand
to gain by switching. If the fees are
high, you may be better off staying
with your existing loan.
Look again at your list of potential
loans. Compare the features such as
ability to make extra repayments, off-
set account and redraw facility.
You may pay more for a loan with
extra features and flexibility. Will
these features be important to you?
Decide and take action
Weigh up the potential cost sav-
ings and differences in features
You will only get the potential
savings if the new loan stays cheaper
over the long term. The longer it takes
for a switch to save you money, the
greater the chance that the interest
rate savings may fade.
For more information on home loans,
visit the Australian Securities and
Investments Commission at www.fido.
gov.au or call 1300 300 630. E-mail
ASIC with topics that interest you at
Do your calculations: It pays to do your sums on home loans. Find the mortgage switching calculator
at the web site www. fido.gov.au
Links Archive December 9th 2010 February 17th 2010 Navigation Previous Page Next Page