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The process of researching, choosing, applying, and then getting approval for a home loan can be long and complicated. So it’s natural to feel like it’s also a huge commitment. Locked in to all those years, documents and conditions. But you know what? You aren’t really as tied down as you might think. Renegotiating or refinancing your home loan is pretty common these days, and one of the most useful tools to have at your disposal throughout this process is a ‘refinancing calculator’.
Luckily for you, iSelect provides a refinancing calculator right here for anyone to use. Feel free to bookmark this page and use it whenever you like to calculate your potential savings when switching home loans with iSelect and Lendi.
Using the iSelect refinancing calculator is simple, but you will need to enter some basic information to get a result. You may be able to retrieve this info from your own records, but we’d recommend clarifying the exact details with your current lender for accuracy. You’ll also need comparable information for the loan you are considering switching to. This should all be available on the quote or pre-approval from the lender.
Once you’ve done the above, the calculator should provide you with an estimate of how much you could save. It’s that easy! If the savings seem worth investigating, then you can start comparing available home loans from a range of lenders and products with Lendi. Click here to get started today.*
Still not sure whether refinancing your home loan is worth investigating? If so, read on. Since you really have nothing to lose by looking into your refinancing options, we’ll cover a few more potential benefits for you.
Refinancing could be a great way to save on your home loan. It’s easy to set and forget when it comes to your mortgage, but the hip-pocket savings from switching to a product with a more competitive rate may be substantial over your loan term. With interest rates at historical lows in 2021, it makes good financial sense to see how your current loan stacks up against others. That said, refinancing can come with fees and additional costs, so it’s important to factor these into your decision.
The first and most obvious benefit is a lower interest rate. Whether it’s due to changes in economic conditions, or simply a better deal, finding a lender with a lower rate could be the key to saving money over the life of your home loan. Because interest rates fluctuate, it’s worth regularly checking to see if your mortgage is still competitive.
At present (2021), interest rates are historically low, but don’t let that think yours can’t get any lower! It’s still a competitive market, and even a small margin could make a world of difference over the years. If you haven’t refinanced or reviewed your home loan in over 18 months, it could be worth reviewing your interest rate again. One tip is to look at what kind of rate your lender is offering new customers and simply asking whether they’ll apply it, or a better deal, to your existing loan.
If you do end up with a lower rate, you’ll likely end up with a lower minimum repayment, which means savings. However, if your lender is hesitant to offer you a better interest rate, don’t be afraid to look elsewhere. There are many Australian lenders, so you might be surprised at what better rates are out there. Even a marginally lower interest rate may save you thousands of dollars over the years.
If it’s affordable, shortening your loan term is a consideration when you refinance. While the payments may be higher, you’ll pay the loan off sooner thus reducing the amount of interest accumulated. But if you’re in a situation where your current payments are more than comfortable, it could be worth considering.
However when considering altering your loan repayment term, don’t just think about the present. For example, if you are planning on having children or purchasing an investment property, your expenses will increase and shortening your loan term may make repayments more difficult.
Mortgages are generally either a variable rate or fixed rate. What might’ve suited you at the time you take out the mortgage may no longer be the most suitable option, so when refinancing it can be beneficial to revisit this decision. Fixed rate mortgages lock in a rate, but can come with break costs, whereas a variable rate mortgage will fluctuate with the market but can often be paid off early.
Make sure to check these exit costs on both your existing and proposed new mortgage. Some lenders may offer split rate mortgage options. This means that one portion of your home loan will be fixed, allowing some stability, while the other portion will have a variable interest rate.
Another consideration is the features to your loan. Again, in an increasingly competitive market, what is available now may be more beneficial to you than what you were offered on your original application. This will vary from provider to provider, but it’s always worth asking the question. Can you split your mortgage into both a fixed and variable? Is there an offset savings account to reduce interest? Do I want a redraw facility?
Some other reasons to consider refinancing may include: