Curious about how much you could save by refinancing your home loan? You're not alone.
In recent times, home loan refinancing has become a hot topic.
With interest rates on the rise since May 2022, an increasing number of homeowners—as many as 28,000 each month —have turned their attention to refinancing.
We spoke with the Allied Finance (WA) team to break down refinancing and see how it can not only be financially rewarding but also reduce stress.
Refinancing is essentially the process of replacing your existing mortgage with a new loan and lender.
You choose the loan you want to switch to, complete a formal application, and provide documentation. If your new loan is approved, the new lender will take care of paying off your old loan, and you'll start making repayments to them.
So, how much could you save through refinancing?
Potentially, a substantial amount!
Many lenders reserve their best deals for new customers. Currently, the average rate on established loans stands at 6.20%. However, new customers typically enjoy an average rate of 5.99%.
So, if your loan balance is around $526,093, a 0.21% rate saving could cut over $70 from your monthly repayment.
Refinancing can be a stress buster
While refinancing can offer opportunities to access home equity, enjoy better loan features, or consolidate various personal debts, the primary motivation for many is to save money by securing a lower interest rate.
This can alleviate financial stress significantly.
According to Finder, 60% of those who refinance admit to feeling stressed about their home loan before making the switch.
If you can relate to this, consider refinancing as a valuable stress reduction tool. Learn more here.
**Disclaimer:** The content of this article is intended for general information purposes and should not be considered as tax or financial advice, whether general or personalized. It does not imply any recommendation or opinion about a specific financial product and may not be applicable to your unique circumstances. Before taking any action, please consider your individual situation and seek professional advice.