How much can I really save by refinancing my home loan?

While we always recommend you reassess your home loan on an annual basis, we know life can get in the way. 

So with the world facing unprecedented times and record low interest rates, we are advising that now is a good time to look at your mortgage. 

Not only will it save you money in the long run, but it will also save you money right now when you need it most. 

What exactly is refinancing?

Refinancing is the process of taking out a new mortgage, potentially with a different bank, to repay an existing loan. 

Refinancing can be a smart way to manage your money because you may secure a better deal, consolidate debt or even unlock equity in your current property. 

Here are some ways refinancing can boost your bank balance. 

Switch to a lower interest rate

By switching to a lower interest rate you’ll see savings immediately. The method behind this is simple. 

A lower interest rate means lower repayments, which mean more money in your bank account. 

Even a saving of $5 a week can make a big difference, perhaps allow you to get that takeaway coffee treat. 

But with the Reserve Bank of Australia cutting interest rates to record lows in March 2020, we have seen some clients save between $300-$500 a week by simply gaining a lower interest rate. 

Consolidate your debts into one

Some people may choose to refinance because it gives you the chance to consolidate your debts into one account, therefore simplifying your monthly repayments. 

For example, if you have a car loan and a credit card debt you may be able to borrow extra money when you refinance to pay out these debts and roll it into your mortgage. 

This will save you money because the interest rates on credit cards and car loans are much higher than home loans at the moment. 

Working towards financial freedom

Maybe focusing on the end game is more your thing? 

Certain home loans allow you to pay off your mortgage earlier, and refinancing can give you the opportunity to reassess and reset your repayment goals. 

So why not take that interest rate cut but keep up your usual payments and see that home loan decrease quicker. 

But wait… let’s talk numbers

So how much can refinancing save me?

With interest rates currently ranging from between 2.4 percent to low 3 percent, you can see savings of $28,000 over 10 years, which is equivalent to about $50 a month (based on a $500,000 loan). 

If you want to know the figures that apply directly to you, your best option is to reach out to your mortgage broker today. 

Here at SCF Solutions, we can assess where your at and show you where you could be. We’re just a phone call away. 

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