Money Hack: Save $6,000 an hour by refinancing your home loan
The home loan refinancing hack means you can save big money for just a few hours of work.
Refinancing your home loan might not seem like much of a hack, but when you look at the numbers the return on investment becomes incredibly clear. If you’re not looking at refinancing your home loan, the banks are hacking your hip pocket.
In order to refinance, you’re going to have to put in a small amount of legwork. But for what amounts to around 10 hours worth of work on your part, you can save an absolute bundle on your home loan.
Here’s how it breaks down for the average household:
Figures from the Australian Bureau of Statistics show that the average home loan size in Australia is $370,500 as of July 2017. Now, the average variable rate on an owner-occupier principal and interest loan is 4.30%.
If you have an average size home loan on an average variable rate, you’re paying $1,833 a month on your home loan.
The lowest rate currently on offer through finder.com.au is 3.54%. If you refinanced that average home loan to this rate, your monthly repayments would drop down to $1,672. That’s a saving of $161. Over the course of 30 years, you’d save $58,141.60.
So, for about 10 hours worth of work, you’re saving nearly $60,000. If someone offered you $6,000 an hour for 10 hours worth of work, would you take it?
In order to refinance, you’re going to have to get a few things in order.
First, you’ll want to talk to your current lender. Let them know you’re thinking about leaving, tell them the rate you’re applying for and see if they can match it.
If they won’t, calculate the cost of exiting your old home loan and entering into your new one. You’ll need to take into account discharge fees on your old home loan as well as any application and settlement fees for your new home loan. This calculator will tell you if it all adds up to savings.
Next, compare home loans to find the best deal for you. In addition to the interest rate, make sure you pay attention to features and fees to ensure you’re getting a home loan that suits your needs.
Finally, you’ll need to apply for your new home loan. You’ll have to supply some information, such as the outstanding balance on your current home loan, information about your property and personal and financial details.
The whole refinancing process is explained in detail here. While it may take a bit of effort on your part, the savings make this hack a no-brainer.
finder money hacks is a bi-weekly round-up of the latest tips and tricks to improve your finances. Check back every Wednesday and Saturday for new hacks.
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