If you’ve had a home or investment property loan for a few years and you haven’t looked at refinancing, you’re probably paying a higher interest rate than more recent borrowers are. That’s because banks and other lenders tend to offer the best interest rate deals to new borrowers rather than existing customers.
But there’s an easy way that you can become a new borrower all over again. You can do it by refinancing your home or investment property loan with either your existing lender or another one. And a good mortgage broker can save you the time and hassle of doing it yourself.
But is refinancing worth it? Let’s do the maths.
Current interest rates
According to the latest figures available from the Reserve Bank, interest rates for existing owner-occupiers and investment property borrowers are higher than those for new borrowers. The differences are shown in the table below.
|Type of borrower||Interest rate for existing borrowers||Interest rate for new borrowers|
As you can see, the interest rate is 0.36% higher in both cases. It doesn’t sound much, but even a small difference in loan interest rates like that can make a big difference to your repayments and the total amount of interest you pay.
Let’s see how much difference 0.36% makes on the average Australian home loan of $588,000. The table below shows the monthly repayments for existing borrowers versus new borrowers over a term of 30 years.
|Type of borrower||Monthly repayment for existing borrowers||Total interest payable||Monthly repayment for new borrowers||Total interest payable|
As you can see, both the repayments and the total interest payable by new borrowers is much less.
How much can I save by refinancing?
This depends on your individual financial circumstances. You can use our handy refinancing calculator to work out how much you may be able to save. How much you could save will depend on:How much you cluld save will depend
- how much you owe
- the interest rate on your existing loan
- the interest rate on your new loan
- the time remaining on your existing loan term
- whether you are looking to refinance an owner-occupier loan or an investment property loan.
How we can help
If you have a home or investment property loan and you’ve never explored the option to refinance to a lower interest rate, you could be paying a lot more than you should. Our licensed and experienced brokers at Wisebuy Investment Group might be able to help you find a lower rate. We can also help you with your refinancing application.
We service a diverse range of clients in the popular Newcastle, Lake Macquarie and Maitland areas. Our experienced mortgage brokers work with more than 60 lenders in the Australian market.
Contact us today for an obligation-free chat to find out more about refinancing. We’d be happy to answer any questions you have and explore options for you.