Refinance
Why Refinance?
Reduce The Interest & Repayment
Even the slightest decrease in your mortgage rate can impact your monthly payment over the loan term.
If you refinance to a lower interest rate, your monthly payment will shrink. You can put those savings toward other expenses or apply it toward your principal balance, which will help you to pay off your loan sooner.
Example
For a $750,000 loan with 30 year loan term, when the interest rate decrease from 5% p.a. to 4% p.a., the monthly repayment will be reduced from $4,026 to $3,581, you will be able to save $446 per month, or $5,352 per year in repayment; and it will save you $160,398 in total interest payment over 30 years.
Pay Off Your Loan Sooner
When the interest rate drop, if you keep paying current repayment amount, the extra repayments will reduce your principal amount and you will be able to pay off the loan earlier.
If your financial situation has improved, you can also actively select a shorter-term loan, or pay more money into the principal, this will allow you to build equity faster and own your home sooner.
Example
For a $750,000 loan with 30 year loan term, when the interest rate decrease from 5% p.a. to 4% p.a., the required monthly repayment will be reduced from $4,026 to $3,581. However, if you keep paying the original repayment $4,026 per month, you will be able to pay off the loan in 25 years, which means you will be paying off the loan 5 years earlier.
Cash Out From Home Equity
A cash-out refinance is a mortgage refinancing option that lets you convert home equity into cash. A new mortgage is taken out for more than your previous mortgage balance, and the difference is paid to you in cash.
Example
A property was purchased 3 years ago, property value was $800k, you borrowed $640k loan. Today, the loan balance is $600k and the property value has increased to $1 million. You now have the option to top up your loan to 80% of the current property value, which means that you can increase your borrowing from $600k to $800k, so you can get $200k cash into your pocket.
Lower ongoing fees
Depending on the product features and your needs. If you could switch your home loan to a lower fee product, you may save the ongoing fees over the life of the loan.
Example
Some banks charge a package fee of $395 per year. If you do not need the features like an offset account, you may not need to pay the package fee. Switch over to a basic product will save you $395 a year, if you have a 30 year loan term remaining, this will likely to save you $11,850 over the life of the loan.
Debt consolidation
By consolidating your multiple debts into one, you have the advantage of just one regular repayment – making it easier to budget and manage your finances. Having one loan reduces the amount of time spent keeping tabs on multiple loan accounts and managing repayments.
It could also help you reduce your overall interest payment by consolidating higher interest rate products into one lower rate product.
Example
If you have a car loan, personal loan or unpaid credit card debt, you could consolidate them into your home loan. So you will have one single repayment rather than making multiple repayments per period.
Also, you can avoid paying 7% interest for the car loan, 9% interest for the personal loan and 15% interest for the credit card debt, you could reduce them all and pay the one single home loan interest rate, say below 5% p.a.
More Product features and services
By doing the refinance, you can select the product features and services that meet your needs, and your current product may not already have all the features that meet your requirement.
Cashback offers and other new loan incentives
Some banks are offering refinance cashback range from $1,000-$4,000, depending on the lender. They’re usually only available for a limited time. This may help you cover some or all of the refinance costs.
Some banks may offer other new loan incentives like Qantas point bonus etc.
Free Consultation
Book An Appointment
The benefits you may get from a refinance will depend on your personal circumstances, and your needs and objectives. Click button below to book a free consultation and find out what benefits we may bring to you.
