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When is the right time to Switch Mortgage Providers?


After having been with your current mortgage provider for some time now, it’s only natural for you to wonder whether it’s time to go ahead and make a switch. It’s true that you could save a lot of dollars by doing so, yet you are still doubtful if the time is right for you. Irrespective of the fact that switching mortgage providers is a simple process, it also has its hazards. Hence, what worries you is the outcome, since it will affect you and your payments in future. This is why it is greatly important for you to be sure that the timing is right and profitable to you.

So, before you go ahead, ask yourself-

  • Why do I need to change my provider now?
  • What other offers are available on the market and how profitable are they for me?
  • What are the refinancing costs? Is it worth the switch?
  • Where do I stand financially today?

As you ask yourself these important questions also keep yourself updated with the following information so that you know the right time to switch your mortgage provider. Here you go.

When You Must/Must Not Refinance

More important than knowing when the time is right for taking the plunge and making a switch, is knowing whether you are ready for it. Sometimes, most of you might just want to make the switch for no specific reason, which of course is not justifiable or sensible on your part. So, here’s a checklist for you to weigh your options out, letting you know where you stand and what you must do next.

#1 Competitive Rates

Whether you know it or not, the need for a lower interest rate and repayments is the first and foremost reason why homeowners decide to make a switch. The percentage of your interest rates could make a huge difference to your repayments. Adversely, if chosen wisely, it can also help you balance other monthly payments like credit cards, personal loans, or the like. The key here is to do your research well, compare rates from other lenders, and find out whether you are getting the best deal. If required, speak to your current lender about the switch. If they truly value you, they might waive off some amount of the fees and sometimes go to other extreme lengths to keep you.

#2 Credit Score

How familiar are you with your credit history? Many people often ignore this crucial factor before applying for a loan or refinance. If you are one among them, then it’s time for you to start considering this area seriously. Ask yourself whether you have been making your repayments on your loans and credit card regularly. A good credit score is also your ticket to lower interest rates

#3 Financial Strengths

How strong are you financially? Are you able to manage your payments on time every month without any hassles? Do you have a reliable source of income? Remember that if you are already struggling to make payments at the present time then it’s not a wise choice to make the switch. Furthermore, you also need to consider the various other fees that are involved while switching mortgages like entry fees, stamp duty, valuation, application, exit, and other ongoing charges.  

#4 Type of Interest Rates

What type of interest rate have you chosen over your loan period? Is it fixed or variable? This choice of interest rate chosen by you will also affect your long-term financial liabilities. So, ensure that you have a long discussion with your lender before you make your choice.  

#5 Customer Satisfaction

Another reason why people decide to switch mortgage providers is that they are not getting the right kind of service. In such cases, you will find that your mortgage provider is either too laidback, careless, refuses to answer your questions, or does not communicate well with you. If this is happening on a regular note, talk to your current mortgage provider about switching first. If they really value you, they will treat you better. If not, it’s time to move on.

#6 Taxes

Taxes play their part too in the equation of switching mortgage providers. Especially if you have an investment property, this factor applies to you more. The reason being that you will not be able to claim any type of deductions for any expense that is incurred when the property is given out on rent. Talk out your options with a financial expert, who can advise you on ways to maximise deductions as well as keeping you updated on the rules of the Australian Taxation Office.

#7 Prepayment Penalties

Refinancing with a new mortgage provider does not make sense if the prepayment penalties on your existing loan are already too high. Calculate the prepayment penalty on your loan and counterbalance it with any savings that you might make. If upon calculations you find that the current rate on your loan is too low then it’s better not to make the switch since you might only end up incurring more expenses than profits in the process.

#8 Available Equity

Another reason why you might want to switch to another mortgage provider is so that you can use the equity on your home to pay for other financial requirements like making home improvements, your children’s education, or simply to invest on another property. Yet again, this will mean that your loan period will increase on the existing property and unless you do not plan to live in it for long, making the switch is a big no.


There are so many more factors to consider when deciding to make the switch between mortgage providers like the remaining term of your current loan and other cost factors as well as your comfort in all this. Everything can seem very confusing from your point of view alone. So, if you are seriously giving refinancing with a new mortgage provider a thought, then talk to a financial advisor, who can weigh out the odds and evens for you. You will have a better understanding of your current situation and also understand whether it’s worth making investments here or somewhere else.