December 31, 2020
Refinancing your home loan is a major decision that can be complex and time-consuming. You may have heard of friends and family members who were able to save large sums of money by refinancing their home loans. Let's explore how much you can really save through refinancig.
The big question: is putting in the effort to see whether you can save money by refinancing worth it? The short answer is yes. Depending on your financial situation, refinancing your home loan could save you thousands of dollars each year! Here are the main ways that Australians can save money by refinancing their home loan:
Lower interest rates
The first way many Australians save money by refinancing their home loan is by paying a lower interest rate. Interest rates are currently at record lows in Australia, and if you’ve had your home loan for several years, it’s likely that you’re no longer paying the most competitive rate. When you refinance your home loan to a new bank or lender, you’re able to access the most competitive interest rates in the market and could potentially save thousands of dollars per year in interest.
For example, if you currently have a home loan of $500,000 that you’ve had for several years, it’s likely that you could be paying around 4% in interest each year. With interest rates currently at record lows, it’s now not unheard of to access interest rates as low as 2%! If you were able to secure a 2% interest rate, then your annual home loan interest charge would halve from $20,000 to $10,000 per year. Imagine what you and your family could do with an extra $10,000 per year in your pocket.
Cash incentives
The Australian home loan market is more competitive than ever and we continue to see lenders fighting for your busienss. In fact, some banks and lenders are now offering upfront cash incentives worth thousands of dollars to refinance your home loan with them.
Not only could you reduce your interest rate, you may receive anywhere from $1,000 to $3,000 cash to refinance as well! With that extra money in your hand, you and your family might be able to start that home renovation you’ve been wanting, or even take a fun-filled holiday.
Consolidating debts
Another way that refinancing could save you money is by consolidating other more expensive existing debts into your home loan. Refinancing your home loan can provide an opportunity to access your equity and consolidate more expensive loans into your home loan, such as car loans and credit cards.
Consolidating existing debt into your home loan has the potential to save you a lot money, and make your life a bit simpler at the same time.
For example, if you currently owed $5,000 on a credit card with a 20% interest rate, you could be paying up to $1,000 per year in interest. If you were able to consolidate the $5,000 debt into your home loan with a 2% interest rate, that same $5,000 would only attract $100 in interest per year, saving you $900!
Mortgage Choice in Mornington offer a free Home Loan Health Check
Our Mortgage Broker Mornington team have the expertise to help you at every step of your refinancing journey. The first step is to have your loan review by us to see if there actually IS a better deal out there for you, that will benefit you in the long run. There are fees to consider when refinancing, so we will help you weight that up as well.
Our free Home Loan Health Check will see us compare your current loan with thousands of others on the market, to see if we can find a lower interest rate or some better features.
Book your FREE Home Loan Health Check today with Mortgage Choice in Mornington! Call us on 03 5973 4011 or click on the Speak to us button.
Our team services the areas of Mornington, Mount Eliza, Mount Martha, Macrae, Safety Beach, Rye, Rosebud, Red Hill, Balnarring, Somers, Hastings, Baxter, Somerville, Pearcedale, Tyabb, and other locations on the Mornington Peninsula.
