Whether it’s automating our savings accounts or opting for homemade coffee rather than a takeaway, all of us have our tips and tricks for saving money. But there’s one practice that could bring significant savings - and many overlook it entirely.
As we’ve written previously, failing to shop around and ensure you’re getting the best deal possible for your home loan could be costing you. By refinancing your loan to take advantage of new offers, lower rates or more suitable loan structures for your needs, you could find a better deal and save money in the process.
How refinancing can drive savings
The simplest way to understand the benefits of refinancing is to consider an example.
Say you currently owe $500,000 on your home, paying 3.50% interest with 25 years left on the loan and you refinance to another lender at a lower rate of 2.85%
By switching loans and making the minimum repayment ($2,332 per month) you would save $51,266 over the life of the loan. By switching loans and making higher repayments ($2,503 per month, the same minimum repayments as your current loan) you would save $72,201 over the life of the loan and pay off your loan 28 months earlier.
Is refinancing right for you?
If you think there might be a better deal out there for you, doing some research is a great place to start. The Moneysmart website has a mortgage calculator and a mortgage switching calculator which can help you compare rates and repayment timeframes.
However, keeping across all the latest offerings from every lender can be time consuming and complex. Working with a trusted mortgage broker can help you identify the best options for your circumstances and your needs, including any special deals that may be available for medical professionals.
If you’re thinking about refinancing, finding out more is as easy as a phone call or email to a BFD Finance expert to discuss your options.
Coming prepared with your existing loan details and current rates will assist us in running a comparison for you. When you’re ready to take the next step, you can speed up the process by ensuring you’ve compiled all the necessary documentation and details to get moving, including verification of your identification, income and expenses (such as bank statements, payslips, tax and credit card statements). But don’t worry we will be here to guide you through the process!