Refinance and Save More Than You Think
I recently organised a home loan refinance for a client, lets call them Tim and Sally.
Tim contacted me as he wanted to see what rates were out there compared to couple's current home loan. Naturally I was only happy to assist.
Tim and Sally were on a fairly decent rate of 4.74% p.a. so I knew I had to work hard when negotiating for them to try and get something that was cheaper so that a refinance would be financially beneficial for them. I started my search with the major Banks (they were already with one of them) and could only find deals around the 4.50% mark. I then went to non-major lenders and found the couple a great owner occupied home loan rate of 4.24% p.a.
Compared to their existing loan of 4.74% this was going to save them 0.50% p.a. I knew Tim and Sally would love the results so I setup a follow up appointment to present the offer and product to them.
Before seeing me, the couple were paying about $2,100 p/m on their loan. With their new rate of 4.24% and loan balance of $400,000 I would be able to offer them a repayment of $1,965 p/m - an immediate saving of $135 p/m. Tim and Sally were pretty happy with this but then I asked them what would you guys do with the spare $135 every month?
They came up with a few ideas but they ended up deciding they wouldn't necessarily miss that new found cash if they were not going through with the refinance.
My suggestion to them was to take that money and put it back into the mortgage as an extra repayment. When I showed them the difference it would make to their loan term they were amazed. A total repayment of $2,100 p/m (i.,e. the same repayment they were already making) against a home loan of $400,000 with interest charged at 4.24% p.a. would mean that the client s would repay the loan IN FULL in 26 years and 5 months and save $42,109 in interest costs.
Over $42,000 saved by simply refinancing to a better deal!
This was a great result from both Tim and Sally and I can assure you they were extremely pleased that they had made the initial phone call to seek my advise and service.