For homeowners who may want to save money over time, refinancing their current home loan and switching to a new one can be an attractive option. However, making the decision to change loans is one that requires careful consideration so as to avoid making the wrong decision that impacts your finances. If you're thinking about switching to a mortgage with new terms, here are some things to consider when changing your home loan.

Am I really saving money by switching to a new home loan?

Switching to a new home loan may seem like a good idea for homeowners who may need the extra income to pay for other necessities. However, you must consider the life of your loan and whether or not switching will help you save money in the long run or cost you more. For example, while you may be able to decrease your monthly payments, you may extend the life of the loan, paying more over time in order to make these adjustments. Sit down with your lender and take time to better calculate the consequences of switching to a new home loan, no matter how attractive the option may seem at the moment.

Should I look for a new lender who will provide me with the loan I need or can I go through my current lender?

Some homeowners will need to consider switching to a new lender while others may be able to reach out to their current lender to request a loan adjustment. If you are considering refinancing, reach out to your lender first to see if they would be willing to draw up a new loan agreement that works best for your needs. If your credit has improved and they are known for adjusting loans, the chances are good that you can change your current loan agreement with them. If not, then it may be time to seek out a new home loan. Just remember that you will have to work with a provider who can successfully help you make the switch as all lenders and agreements are not necessarily compatible with each other.

Will these changes cost me more in hidden fees not associated with my monthly payments (and can I afford it)?

While your monthly payments may decrease and your loan agreement may seemingly work to your benefit, you will also need to watch out for hidden fees that could end up costing you a substantial sum of money now. Ask your current lender (or future lender) what are the fees associated with switching? Is it worth it right now? More importantly, are you going to be able to afford it? If you are planning major house renovations like vinyl floor installation or replacing your roof, for example, it may be best off until you have the money to pay all the fees associated with changing to a new home loan (if this is applicable to your current situation).

If you are able to go to your mortgage lender and work out an agreement with them, the process of changing your home loan will be relatively easy. If you have to switch lenders, however, trying to find the right mortgage lender and a loan agreement that offers you a good deal can be a complex, involved process. Fortunately, there are resources available that can help you make the best decision for your needs. If you are on the hunt for a new loan, you can compare home loans with iSelect to make it easier for you. With the right amount of research and consideration about how it will affect your current agreement, making the decision to switch is one that you can do with confidence.