Susie’s Mortgage Repayments
Susie is borrowing $700,000 to buy a house and she wants to save as much money on interest repayments as she possibly can. After comparing home loans with 100% offset accounts, Susie decides to calculate just how much difference a 0.25% p.a. difference in interest rates could make to the total cost of a loan.
If she can find a loan with an interest rate of 4% p.a. on a 30-year loan term, her monthly principal and interest repayments will be $3,341.91. The total interest she will end up paying over the life of the loan is $503,086.54.
But if Susie finds a loan with a marginally lower interest rate of 3.75% p.a., her monthly repayments will be $3,241.81 and the total interest over the life of the loan will be $467,051.29 — that’s a total interest saving of $36,035.25.