Refinance Your Home Loan to a Lower Interest Rate and Save Money

Home purchase is one of the most important decisions for Australian families and home loans help them to make the dream come true. As a result, loan repayments become unavoidable part of their lives. Many people start changing their lifestyle and can’t spend the same amount of money on themselves and family members just because of the home loan burden.

However, it is possible to refinance the home loan and significantly reduce monthly repayments. Nowadays the majority of banks try to attract new customers and offer special rates as well as cash incentives. You may have committed to a home loan years ago, but the market keeps changing, and you may come across deals that are better for your current needs and financial situation.

There are many challenges involved in getting your home loan refinanced, but there are definitely a lot of benefits on offer if you get it done correctly.

In most cases, people refinance their home loans to the lower interest rate and save money overall. There are other reasons like consolidating debts, using home equity, etc., but the most common one is lower interest rate. It is required to plan and properly execute the refinancing process with your lender so that you can save money.

Everyone who has taken a loan wants to pay it off as quickly as possible. Imagine you have a 30-year home loan of $600,000 at a 2.99% interest rate. Now, if you get your mortgage refinanced to a 2.49% interest rate, you will save around $250 monthly and around $90,000 over the entire 30-year loan term.

A new lower rate will bring down your monthly repayment. You can continue repaying the same amount you used to before and pay off your mortgage much more quicker. Through refinancing, not only do you pay a lesser amount but also reduce your loan term. Your dream home can be completely yours in less money and time, thanks to refinancing.

Not every borrower gets the same loan amount at the same interest rate, and many factors affect this. Two persons will get the same loan amount at different rates depending on a high or low-risk profile. The riskier it is to provide a loan to a person, the higher will be the interest rate.

Some factors considered by lenders before providing home loans include:

• Financial situation and income position
• Loan to value ratio (LVR)
• General living expenses
• Deposit for the property
• Existing loans and debts
• Value of existing assets  
• Type of the loan (Owner occupied / Investment loan)
• Repayment structure ( interest-only or both principal and interest repayment)

The interest rate is one of the major contributors to your loan but not the only one factor that needs to be considered when you make a decision to refinance the mortgage. You might possibly find that there are some charges and fees associated with terminating of existing loan term and refinancing it to a new lower interest rate. The overall repayment amount might be very high as some lenders include additional exit or break costs fees. Apart from that there are some charges associated with applying for a new loan and releasing mortgage with your current lender. You might need to examine carefully all features that suit for your current goals such as redraw facility or mortgage offset account, ability to pay more with no extra costs, etc.

Therefore, you need to plan properly and talk to an expert in order to know how much money you will potentially save after refinancing the current loan. You can book a free consultation with one of our mortgage brokers and get a clear understanding of all benefits for refinancing your home loan. Go with a lender that suits your needs and is ideal for you.

You need to consider your personal needs and many other factors before getting your home loan refinanced.

You can save money monthly

Before committing to refinancing, calculate the amount you need to pay monthly. Accept the deal only if your repayments go down. Sometimes, you get a lower interest rate, but the amounts associated with refinancing make the overall cost higher than before. However, in most cases, you’ll save money and also get new features or rewards.

Get cashback and other benefits

There is great competition among credit providers and lenders. Most of them offer exclusive rewards and cashbacks to customers for refinancing their home loans with them. You may receive better rates, gift cards, gifts, cashback incentives, and much more. Go through all terms and conditions and other benefits associated with refinancing.

Finish the loan sooner

When your monthly repayment amount goes down, you can finish off your mortgage sooner than before. The amount you pay monthly reduces, and you will save some money each month. Now you can use this money to make repayments which will reduce both the loan term and the total interest paid.

Pay how you want

You can choose between a variable or fixed interest rate for your loan. Generally, when a fixed-rate term finishes, you are moved to a high variable rate. Look for refinancing when the fixed term is about to end so that you can save the break cost fee and get a beneficial loan deal.

Use the money saved for renovation or investment

The money you save by refinancing to a lower rate can be used to make renovations to your house or to invest in other properties. Renovating will also boost your property’s value in case you want to sell or rent it out. If you are still unsure whether you are getting the best rate and saving money, get in touch with our home loan experts.

Many people are under the burden of long-term home loans and can’t have a peaceful life because of the stress of monthly repayments. Well, you cannot avoid repaying your home loan, but you can get it refinanced for a better deal and save money. 

There are a lot of benefits of refinancing if you do it correctly with the right credit provider. Not only do you save money, but you finish off the loan quicker than expected. Before refinancing, you have to consider your financial condition and plan the process strategically with your lender.

Get in touch with NG Loans to refinance your mortgage to a lower rate and enjoy many other benefits. Book an appointment with one of our brokers and start saving on your loan today.