Refinancing doesn’t mean much to most people and that's understandable. Most people don’t think about refinancing until they have a bad experience or someone prompts them to consider a change.
When it comes to switching home loans, we’ve heard a few misconceptions from our customers that are floating around and stopping people from taking the leap.
We thought it was about time to settle some of the myths once and for all.
#1 It’s too hard and too complicated
Moving your home loan to another bank can seem like a complicated and time-consuming task. It’s understandable when you think about the size and importance of the investment. It requires a lot of effort and a lot of paperwork right? When you're tied up in your busy daily routine it might seem like a task that can wait. But we think you shouldn’t - here's why.
Whether you're considering refinancing because of the ethics of your bank, or a better rate, don't delay. It’s actually a pretty simple process. There just a few steps that require your involvement:
- Making a time to meet with a lender;
- Providing some documents and information;
- Signing the contract.
#2 There's a huge exit fee
People tell us that they want to refinance to us they believe in our values and our responsible banking commitment. But often, they stop short of taking action because they think there will be big cost involved in exiting their current bank. Not true.
Lenders are not allowed to charge an exit fee if a loan was taken out after 30 June 2011. However, you should know that if you are on a fixed rate loan, you may need to pay a break fee.
In terms of other fees and charges, the only standard fee involved in refinancing with Bank Australia is a small government fee that applies for administering a change to your land title.
#3 It'll be an awkward break up with my existing bank
Changing your provider for any service or product can involve some awkward conversations. We’ve all had the experience of being asked why you’re leaving and enduring an attempt to convince you to stay.
When you refinance with us, there doesn’t have to be any of that. At the very beginning of the process you can sign a discharge authority form that means we take care of all matters relating to your existing bank. No need to talk to them at all!
#4 People only do it to get a better rate
There are several reasons people consider refinancing their home loan, and getting a better rate is one of them. While people do refinance with us based on our competitive rate, it’s not the only reason.
Many people do it because of their values. They don’t want their money to support harmful industries and organisations.
The recent divestment movement is the perfect example. People are selling off shares, moving superannuation accounts or moving deposits and loans (including homes loans) away from institutions that invest in or lend to the fossil fuel industry.
Bank Australia is proud to be able to say that we have never and will never lend to the fossil fuel industry. Our responsible banking commitment means we don’t lend to or invest in industries that harm people or the planet.
#5 Divestment won’t change anything
If you haven’t read our article, Your home loan buys you a house, but what else is it buying? have a read.
In short, every dollar that you borrow, and the interest that you pay on your mortgage, goes somewhere.
The more people and organisations that pull their money out of financial services that support the fossil fuel industry, the quicker the transition to clean energy will be, which is critical for us to move towards a safe and sustainable climate.
#6 I need to be an expert to know whether it’s the right choice
Understanding rates and fees, and making sure that you know what financial impact of you refinancing your home loan can be daunting. It can also feel like that all banks would tell you to refinance regardless of whether it’s the right choice or not; all they want is your business.
But this isn’t true at Bank Australia. Our lenders will assess your individual situation and the costs and benefits of you moving your home loan across. Why? Because as part of our responsible lending commitment, we want to make sure that refinancing with us is in your best interests.