Has your lender given you a call or emailed, apart from after Reserve Bank rate reductions, to say, “Mr. & Mrs Client, you have been fantastically loyal customers so we have decided to reduce your home loan interest rate and save you $25,000 over the next 5 years!”. Of course not, as they will be eroding their profit unnecessarily!
Yet the possibility of saving that $25,000 is very real, it will just take a few hours of your time!
Plus you can have a Merry Christmas….
The scenario:
You currently have a loan of $500,000 with an interest rate of 3.30% with repayments of $2,450 per month.
You can refinance your loan with $400,000 Fixed for 4 years at 1.99% and $100,000 with variable interest at 2.60%
- Year 1 Savings $5,851
- Year 3 savings $16,998
- Year 5 savings $25,024
No smoke and mirrors involved!
When was the last time you looked at your home loan? Is your lender looking after you?
Refinancing a mortgage in essence, is the transaction that occurs when an existing loan is paid down and is replaced with a new one.
There are many common reasons why homeowners refinance, such as:
A change in financial circumstances
To obtain a lower interest rate
Dissatisfaction with current lender
Convert from a variable to a fixed rate (or vice versa)
An opportunity to access current home equity to finance other purchases and/or the desire to consolidate
The only time to consider refinancing is when you’re certain that it is in your best interests. Everyone is different, and therefore peoples’ reasons for refinancing differ greatly.
How do you know if a refinance may benefit you? You should ask yourself the following questions:
Does your current loan match your lifestyle?
Are you planning to start a family? How will this affect you financially?
Are you considering renovating your home?
Is your fixed rate loan close to the expiry date?
Would you like to change your current loan to a fixed or variable rate?
Could you use the equity in your home for an investment opportunity?
If you had answered yes to any of these questions, or are still unsure, then simply talk to your mortgage broker about reviewing your current home loan.
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
