Can refinancing help you achieve your financial goals?
Once a home loan is selected and repayments become a familiar part of an expense statement, they’re often forgotten. But refinancing can offer great savings without great sacrifice.
There are several reasons home loan refinancing may help people achieve their goals faster. It can free up equity to invest, fund property renovations or support a holiday. Refinancing can also help people pay off their home loan and other debts sooner through consolidation and/or saving on interest or fees and charges. Some of your clients may need greater flexibility now or want to reduce risk by fixing their repayments over a period of time.
Real life examples
Here are three examples where Loan Market clients have recently refinanced to save and invest in property or pay off their mortgage faster. <p style="padding-left: 30px;">Case study one</p> <p style="padding-left: 30px;">Anna was paying $1,205 per month on her existing home loan of $285,000. Through refinancing she now pays $1,150 - a monthly saving of $55. With the equity in her property, Anna was able to purchase an investment property for $385,000.</p> <p style="padding-left: 30px;">Case study two</p> <p style="padding-left: 30px;">Katie came to Loan Market determined to pay off her mortgage faster. Through refinancing her monthly loan repayments of $1,892 were cut by $337. By continuing to pay $1,892 each month she’ll save over $98,000 on interest over the life of her loan and reduce her loan period by nine years and eight months.</p> <p style="padding-left: 30px;">Case study three</p> <p style="padding-left: 30px;">Adam was paying $1,975 per month for his $312,000 home loan and was looking to move. By refinancing his loan he has saved $308 a month and was able to use the equity in his property to purchase his new home. Adam now rents his other property out as an investment.</p> Some things to consider
There are some factors I’ll review to determine if refinancing is the right move for your client. There are costs involved in mortgage refinancing so it may not be the best financial move for everyone. These costs include government charges to switch (this is a maximum of $250) and any lender application fees. Aside from any applicable costs, some other things I’ll review are:
- The repayment history or changed financial circumstances
- The loan-to-value ratio (LVR)
- The loan amount - if it’s small, refinancing may not be worth it
When reviewing your situation, I’ll be looking for an opportunities to save your client’s money and improving their financial situation within a year. If you have clients who are looking to save money or are interested in how much equity they have in their existing home contact me.