Why a regular review your home loan can save you money and cut years off your home loan!
With interest rates at all-time lows, there has never been a better time to review your home loan. A typical home loan is taken out over 25 or 30 years, but so much can change in a short space of time.
When was the last time you reviewed your home loan? If you haven’t had a review undertaken in the last 2 to 3 years now is the time to act.
Let me tell about Jack and Paula…
Jack and Paula are small business owners, running a successful web business. They purchased their home not long after going into business. Thus, they were not able to get a loan with a main stream lender.
They were happy with the lender (they were able to buy the family home), but after 7 years it was time for a review. Of late their lender had not been passing along the interest rate cuts as the official interest rates decreased.
When they came to see me the interest rate on their home loan was 5.84% and they were making loan repayments of $1,200 per fortnight. They also looking to release some equity from the property as they wanted to freshen the place up (painting etc).
Working with them we found a main stream lender who was happy to refinance their loan at 4.34% (a 1.5% reduction on the interest rate), and provide them a cash out of $50,000.
On a 30-year loan term their minimum fortnightly repayments dropped to $672. More importantly Jack and Paula could afford to continue making repayments of $1,200 per fortnight. This meant that they would pay off their home (including the additional $50,000) in only 12 years.
Jack and Paula will be able to save more than $60,000 over the life of their loan because of the refinancing.
Why you should review your home loan?
While Jack and Paula’s circumstances will most likely not match your own, if you don’t carry out a regular review you would never know. Your savings may not be as dramatic, or you could have greater savings.
Lowering your interest rate by 0.5% on a $300,000 loan will save you over $1,000 per year in interest. This may not seem like a great deal, but over time this adds up and particularly if you are using the savings to pay extra off the home loan.
Are you interested in seeing if you could be saving money and on you way to owning your home sooner? Give me a call today on 07 3911 1190 or fill in the enquiry form here, to schedule your free and no-obligation home loan review.