Are you an Australian homeowner who’s feeling the pinch of higher home loan repayments? If so, then it might be time to consider refinancing.
When you refinance a home mortgage, you take out a new loan to pay off your existing one. The new loan typically has a lower interest rate, which means you can save money on your monthly repayments and potentially reduce.
The total amount of interest you pay over the life of the loan.
But refinancing your home mortgage can be a big decision, so you want to be sure it’s the right choice for you before you jump in. A home loan refinance calculator can help you make that decision by giving you an estimate of how much money you could save by switching to a new loan.
What’s a home loan refinance calculator?
A home loan refinance calculator can be a valuable tool for Australian homeowners looking to save money on their home loan. That’s because it lets you compare your current home loan with other loan options. You enter information such as your current loan balance, interest rate, and repayment term, as well as the details of any potential new loans you’re considering. The calculator then shows you how much you could save on your monthly repayments and over the life of the loan by refinancing.
One of the biggest benefits of using a home loan refinance calculator is that it allows you to see how different home loan refinance rates can affect your repayments.
For example, let’s say you currently have a $500,000 home loan with an interest rate of 5.85% and a repayment term of 30 years. Your monthly repayments would be around $2,950.
But if you secured a lower interest rate for refinancing your home loan like 5.20%, your monthly repayments would drop to around $2,745 – a saving of $205 per month.
Better yet, over the life of the loan, you could save more than $73,000 in interest charges.
But while refinancing your home can save you money, it’s not always the right option for everyone. There are fees and charges involved, such as discharge fees for your existing loan, application fees for the new loan, and valuation fees. You’ll need to weigh up these costs against the potential savings to determine whether refinancing is right for you.
Is refinancing your home loan right for you?
Here are four factors to consider before refinancing your home loan:
1. Your current loan: Consider the terms of your current loan, such as any exit fees or break costs associated with refinancing.
2. Your financial goals: Think about your financial goals and whether refinancing aligns with them. For example, if you’re planning to sell your property in the near future, refinancing may not be the best option.
3. Your credit score: Your credit score can impact the interest rate you’re offered for refinancing, so it’s essential to know your score before applying.
4. Your equity: Your equity in the property can also impact the refinancing process. If you have a high level of equity, you may be able to access lower interest rates and more favorable loan terms.
Alternatively, an expert mortgage broker, such as Loan Station, can help you decide whether refinancing is right for you by assessing your current financial situation, your long-term financial goals, and your eligibility for different loan options. They’ll also help you compare loan options from different lenders so you can make an informed decision.
