Refinancing could be a wise option for homeowners who want to save cash in the future or decrease their short-term living costs; despite the staggering number of homeowners who have utilized refinancing, they have yet to determine if they can save money each month. Experts warn that putting off reviewing one’s loan can result in not taking advantage of the opportunity to cut down on mortgage payments. This case study demonstrates how much savings a lower interest rate can bring deliverance.
Case Study
John bought an investment property in Sydney some time ago. He took out a loan for 30 years with an interest charge of 7.75 percent. However, after some investigation and contacting a bank, he discovered a lender willing to accept the refinancing request with an interest of 5.54 percent. This represents a reduction of 2.21 percent, translating into an impressive savings every month.
With a loan at $500,000, John was making an annual mortgage payment of $2,800 at a rate of 7.75 percent. But, after refinancing the loan at 5.54 percent, his new monthly mortgage payment is $2,259. This means an annual savings of $541. month, and it also allows him to save about $195,000 throughout his loan.
Navigating The Refinancing Maze: Choosing Between Fixed And Variable Rates
As the Reserve Bank makes its decision to increase interest rates in order to reduce rising inflation, Australian homeowners face an arduous decision: whether to choose either an adjustable or fixed interest rate for refinancing. Mortgage experts at Home Loan Experts recommend that homeowners perform a “health review’ of the rates of their home loan, particularly those who are one of the many who are close to the expiration date of their fixed term. By contacting their bank and looking into the options available, homeowners can be sure that they are able to control their debt and pay for their loans.
The majority of fixed rates are in the range of 6 percent as of February 2023. It is the choice to either lock in at the current rate or wait through the rate hikes with a variable rate vital, particularly considering that rates are likely to reach their peak within the next six to twelve months before falling again. With all the uncertainty, homeowners should take action now to ensure the financial security of their families. The graph below illustrates how variable and fixed loans differ in a number of crucial ways.
Have Our Experts On Your Side!
If you’re currently in that same situation, you should seek the advice of professionals. Call Home Loan Experts at 1300 889 743 or fill out our no-cost assessment online form now to begin exploring the options available. Starting the process as early as you can will help you avoid losing out on potential savings because of delays or rate fluctuations. Please make sure you are in control of your financial situation today before it’s too late.
