Can Refinancing Save You Money?

Yes, if done right, refinancing can save you money. A lower interest rate could cut thousands off your yearly repayments. However, there are key things to consider to avoid pitfalls.

We’ll compare loans carefully, including loan length
When comparing rates, ensure you’re looking at the same loan term. For example, if you have 25 years left on your loan, you should try to compare based on 25 years, not a new 30-year term. Longer loans could mean paying more interest over time.

We’ll explain any costs

Refinancing may involve fees like:

• Break fees for exiting a fixed-term loan early.
• Settlement or application fees.
• Ongoing monthly fees that add up.

We’ll consider your Loan-to-Value Ratio (LVR), as it could affect savings
LVR is your loan amount compared to your property’s value. If it was over 80% when you first took your loan, you may have paid lenders mortgage insurance (LMI. If it’s still over 80%, you might need to pay LMI again, which could cancel out savings from a lower rate.

We may talk to your current lender first
Lenders often give better deals to new customers. We can contact your lender and ask for a rate review, especially if there are better offers elsewhere. Staying with them might be easier, but don’t let loyalty stop you from switching for a better rate.

HOW TO SAVE TIME AND MONEY RIGHT NOW!

Rates are dropping, consider keeping repayments the same.
After a rate cut by your bank, your lender may or may not automatically adjust your payment in line with the reduction. In either case, consider keeping payments the same as before the drop as it could help you pay off your loan faster.

Refinancing can lower your payments and save money, but watch out for fees, LVR issues, and unfair comparisons. We’re here to help explore your options. Chat to us now to see how we could help.