I believe you have heard people talking about the good reasons to refinance. Refinancing your home loan can be a great step to save money with improved loan features such as lower repayments or extra repayments. In simple words, refinancing can assist you in achieving important goals by taking advantage of the present competitive mortgage market. You can also equip your loan with brand new features and packages. But, do you know how much you could save by refinancing?
Although, refinancing your home loan may offer you some additional features, such as flexibility with repayments, a redraw facility, and an offset account. For the majority of people, the motivation for refinancing is saving money. I bet there are a lot of Australians who don’t know what their current mortgage rate is. When it comes to saving money, the most significant factor is the interest rate.
Secure a lower interest rate
Mortgage rates are dropping sharply with the lowest rate of 2.09% in the market. Switching to a lower interest rate will result in a less repayment amount. That means more a great way to pocket serious savings. In other words, you will feel a tangible difference by increasing the weekly, fortnightly, or monthly cash flow, which would save hundreds of dollars per month potentially.
How much you can save
If your current loan amount is $500,000, the current interest rate is 4%, you are paying off principal & interest on a monthly basis.
Let’s say, you secure a new interest rate of 2.19%, do you have an idea about how much you can save?
You could save $491.12 per month and you will save $176,801 on the total interest payable over the 30 years loan term.
Securing a lower interest rate is one of the best reasons to refinance.
When the interest rate drops significantly, refinance immediately to shorten the mortgage terms and save your money on interest repayments.
Consider fixing your mortgage to take advantage of lower interest rates.
When it comes to this type of a financial decision, there are always other factors to consider. If you’re considering refinancing, you should always consult with a professional financial advisor like us. We will come up with a tailored solution for your circumstance and make sure your home loan refinance is a smart choice.