One of the top reasons to switch home loans or refinance is to reduce the interest rate on your current mortgage. Traditionally, the rule of thumb is that refinancing is sensible if you can lower your interest rate by at least 2%. Some believe that at least 1% in interest savings is enough to refinance. When it comes to switching, it’s worth looking at non-bank and online lenders’ refinance offers.
These institutions often offer home loans with the same features and options as the Big 4 with even more competitive interest rates. Reducing your interest rate not only helps you save money, but it also increases the rate at which you build equity in your home, and it can decrease the size of your repayments.
Reduce Home Loans is an online lender offering variable rate home loans of up to 80% LVR (Loan to value ratio) at 1.88% p.a. (1.97%* p.a. comparison rate). With a minimum 20% deposit, the Super Saver Variable also boasts flexible repayment options such as weekly, fortnightly and monthly repayments, unlimited extra repayments and online redraw, an optional e-offset (at $395 p.a.) and the free ability to split the loan to control your finances.
Home loan comparison site Mozo has identified the savings you can get by refinancing to an online lender. Mozo finds that a borrower of 30-year loan term with an interest rate of 1.88% p.a. with a loan of $400,000 can expect a minimum monthly repayment of $1,527.32 on Reduce Home Loans’ Super Saver Variable. The current Big 4 average variable rate is 3.53% p.a. for an 80% LVR home loan. Add-on options such as redraw an offset may cost you higher rate or yearly fees. By comparison, repayments for a $400,000 on the average Big 4 rate is $1,802.88.
That’s $275.56 per month in savings, or $3,306.72 in a year just by refinancing a loan of $400,000 from a Big 4 bank to an online lender. What would you do with the savings?
Find out how much you can save by using a mortgage repayment calculator.
Give Reduce Home Loans’ specialists a call to learn more about the Super Saver Variable Home Loan.
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