IS NOW THE TIME TO REFINANCE?
Do you want to save up to $5000 per year on your home loan? The record low interest rates in Australia today coupled with the global impacts of COVID-19 mean you are more than likely overpaying for your home loan. It only takes a few minutes to potentially save thousands so read on and we can help you keep more of your hard earned cash.
Most people choose to refinance for a specific purpose: to save money on interest, release some equity or consolidate some debts.On the back of mounting uncertainty in the Australian economy, which is already growing below trend, the Reserve Bank of Australia slashed interest rates in March 2020 to a record low of half a per cent.
Looking at the market as of March 2020, variable interest rates for a $600,000 home loan range from 2.74% to 3.09% on owner-occupied loans, and 2.84 % to 3.30% on investment properties.
Assuming you have a $600,000 house on a 30-year loan term. If the interest you’re currently paying is 3.5%, you’re spending around $2,695 per month.
Now if that rate was down to 2.74%, you would be saving $380 per month or about $4,560.00 per year.But, it’s what you do with those savings that really matters.
You can keep your payments at the same level you’re paying now and reinvest the $380 back into your mortgage. This way you’ll reduce your loan term – we’ve run the numbers, and this will shave five years and nine months off your loan term. Better still, you’ll save $58,972.00 in interest payments.
What are the other benefits of refinancing?
Using equity to renovate your home is another great option, because it can help increase the value of the home and maximise its resale potential in the future. For instance, upgrading the kitchen can add value and appeal, while adding a swimming pool can increase a home’s value as well.
Debt consolidation is another win for people who choose to refinance (dependent on their circumstances). Normally, short-term debts attract higher interest rates – personal loans debts, credit cards, store cards etc – but by refinancing, you consolidate these into a single loan and make one regular payment instead of multiple ones. The mortgage interest rate of around 2.74% to 3.09% is far lower than these consumer debts, which often have interest rates of 20%-plus.
However, to do this effectively, you need to make sure your loan is structured correctly, otherwise it may be the case that you’re paying more in interest charges and fees in the long term.
We’ve saved the best for last, too. Of course, there’s the good old perk for home loan refinancers to make a switch to a new lender and get a cash back incentive.
Imagine receiving $2,000-$4,000 to spend on anything you like? A big screen TV? A fun holiday getaway? What would you spend your cashback incentive on?
We are experts in refinancing and have helped countless home owners across Australia shave thousands off their home loan. Get in touch with us now using the form below and we will walk you through the entire process and help you understand how much you can save by refinancing.