While refinancing might save you money, there are some fees and costs associated with refinancing. However, as long as you get a lower interest rate, you may be able to recoup some of the fees after just a few months.
How Much Does Refinancing Cost?
The costs and fees associated with refinancing can vary depending on the area you live in, your lender, whether you are switching to a new lender, and the amount of equity you have in your home. However, some of the most common fees include:
- Discharge Fee/Termination of Mortgage: this is also known as a settlement or termination fee. This fee covers the lender’s legal costs and is paid when you close your old loan and can vary between $75-$600.
- Property Valuation: This fee may be covered in your application fee, but it covers the property valuation to determine the amount of equity you have. This fee can range between $50 and $420.
- Mortgage Application: Some lenders may waive this fee on a refinance loan. This fee can range between $150 and $995.
- Break Costs: These fees don’t always apply, but they might if you’re switching from a fixed to a variable rate. Your lender determines these costs.
- LMI: If you borrow more than 80% when refinancing, you will have to pay LMI. This amount depends on the size of your loan and the amount of equity in your home.
- Stamp Duty: If you’re refinancing with your current lender, you may not have to pay stamp duty. This is one of the largest fees associated with refinancing with a different lender, and it is dependent on the cost of your home, what type it is, and where you live.
- Switching Fee: If you are refinancing with the same lender, you may have to pay a switching fee of around $300.
- Settlement Fee: This fee is paid to your new lender to cover the costs associated with creating your new loan. It can range from $15 to $650.
As you can see, there are a lot of fees associated with refinancing your mortgage. At Mortgage House, we want the refinancing process to be simple, easy, and affordable.
