If current Australian and world events have left you wondering about the state of your finances, you’re likely not alone.
Whether you have been affected by the recent bushfires or are feeling the blow of the latest outbreak of COVID-19 (Coronavirus), you may be left thinking you need to hold onto your cash even tighter than you did before.
So while making small changes like saving on grocery shops or cutting costs on your energy bill may all help in the long run, refinancing your mortgage could be an effective way to give yourself an instant pay rise.
Since the Reserve Bank of Australia (RBA) cut the official cash rate by 25 basis points to an historic low of 0.50% earlier this month, home loan rates have become more competitive than ever.
According to the Mozo database, a whopping 52 mortgage lenders passed on the full 0.25% rate cut, leaving the average variable rate sitting at 3.49% (compared to 4.34% this time last year).
Plus, 82 out of 95 lenders in our database offer fixed or variable home loan rates below 3.00%, with the most competitive rate currently at a low 2.44%.
How much could I save in monthly repayments by refinancing my mortgage?
Let’s do the maths.
Say you currently have a 30 year home loan of $400,000 at last year’s average of 4.34%, you’d currently be paying $1,989 in monthly repayments.
However, if you were able to refinance that 30 year loan to another loan with a more competitive interest rate, like 2.49% (one of the lowest on our database), your monthly repayments would sit at $1,578 instead.
That’s a $411 difference, every month!
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So in a nutshell, if you took out a home loan last year or earlier, and your lender hasn’t passed on the recent RBA cuts, chances are you aren’t getting as good of a deal as you could be.
Want to check some offers out? Take a look at the table below, or give our Switch & Save Calculator a try.