Fight Cancer Home Loans

Everyone wants to pay less on their mortgage, and refinancing is one strategy to help lower your interest rates

We take a look at how you can get the most out of refinancing.

Why refinance?

Generally, people refinance to negotiate a better deal on their home loan and pay it off sooner. Depending on your situation, you should be able to save money. Taking advantage of lower interest rates and new products that weren’t available when you negotiated your home loan.

To help let’s say you previously took out a $300,000 loan at 7.5% over 30 years with monthly repayments of $2,098. If you refinanced to a new loan at 4%, you could save $239,543 ($665 per month) over the life of the loan by making the minimum repayments of $1,432 per month. 

Once you’ve refinanced, if you continued making the same minimum repayments as your previous loan ($2,098 per month), you’ll potentially save $346,912 and pay off your mortgage 165 months early. 

Make it work for you

Take advantage of your refinanced loan by: 

  • Consolidating debts: Home loan interest rates are often lower than those for other forms of credit. You can save money by consolidating debts such as credit cards or personal loans into your mortgage. Beware, paying off a short-term loan over a longer period will likely incur extra interest and fees. Put the money saved from consolidating your debts into your mortgage.  This will reduce the overall debt faster.
  • Splitting’ your loan: Have part of you loan at a fixed rate of interest for a set period of time. Have the balance at a variable rate. When the fixed rate period ends, the loan reverts to the variable interest rate. You benefit from the security of the fixed rate and flexibility of a variable rate loan, if interest rates rise.
  • Having an offset account: The balance in your offset account is subtracted from the principal amount before interest is applied. You will spend less on interest over the course of your loan.
  • Making extra repayments: Any payments made on top of your regular repayment will save money by reducing the amount of interest you’ll pay.

When should you consider refinancing? 

Life brings change and your mortgage needs to keep up. Maybe you now have a partner, a young family, a new job that pays more. Have become empty nesters with extra cash on your hands. If your current loan don’t allow you to pay more (or less) on your principal amount, it could be worth considering refinancing into a more flexible arrangement.

Refinancing or loan switching can save money, but you might incur costs such as exit and establishment fees, government charges and administrative or legal expenses. These costs need to be determine to see if you’ll save in the long run.

Today’s home loan market is very competitive. There might be a loan out there offering the features and flexibility you want. Before you make any decisions, be clear on your reasons for refinancing.You should speak to an experienced mortgage broker or financial expert to ensure you’re making the right financial decision.