How much can I save by refinancing?
As at March quarter, 2017, the average new mortgage in Melbourne is $384,000. If you have an interest rate of 3.74% compared to 4.74%, over the course of a 25 year loan, you could save around $64,000!*
That is just the interest you could save, but what about the other features?
Home loans come in all shapes and sizes from basic home loans through to home loans with numerous features. Making sure you have the right home loan and using the features available in it can save you money. Here are just a few things you might want to consider including when to refinance and how much you can save.
All the following examples will be based on a home loan of $380,000 at an interest rate of 3.8% for 30 years.
Offset account
An offset account is an account which uses any money in it to reduce your interest. For example, with the loan of $380,000 if you have $25,000 sitting in your offset account you will only pay interest on $355,000 of the loan. Over a 30 year loan, at these rates and no extra payments, this will save you $47,807 in interest along with 2 years and 3 months on your home loan.
Extra Payments
Some home loans charge you a fee to make extra payments which can negate your savings. Refinancing to a home loan with fee free extra payments can save you money. If you deposit an extra $100 a month on a $380,000 home loan at 3.8% you can save $21,534.06 and 2 years, 4 months off your home loan.
Interest, an offset account and extra payment options are just three examples of how much you can save by refinancing. Your exact savings will vary depending on your circumstances. To find out how much you can save, speak with one of our brokers.
*The above is for illustrative purposes only and assumes a fixed interest rate of 3.74% and principal and interest product for a 25 year term with no fees or charges applying and no additional repayments being made.
This article is not to be taken as financial advice. Every applicant’s personal situation will vary. We recommend seeking professional advice for your circumstances. All loans are subject to the normal lending criteria.
Disclaimer:
This article is written to provide a summary and general overview of the subject matter covered for your information only. Every effort has been made to ensure the information in the article is current, accurate and reliable. This article has been prepared without taking into account your objectives, personal circumstances, financial situation or needs. You should consider whether it is appropriate for your circumstances. You should seek your own independent legal, financial and taxation advice before acting or relying on any of the content contained in the articles and review any relevant Product Disclosure Statement (PDS), Terms and Conditions (T&C) or Financial Services Guide (FSG).
Please consult your financial advisor, solicitor or accountant before acting on information contained in this publication.
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