If you refinance your home loan, you could save yourself $3,500 in the first year alone. This is on top of any discounts that you may get through an interest rate reduction.
You can get a $3,000 refinance cash bonus if you lock in a two-year fixed rate of 1.89% through Suncorp. If you switch from a rate of 2.85% to 1.89% you will save $61,167.02 over the lifetime of the mortgage, usually 25 years.
HSBC is offering savings of up to $61,044.54 if you switch from a rate of 2.86% to a two-year fixed rate of 1.88%. You will also get $3,288 cash back. These savings are based on a two-year fixed-term mortgage with a deposit of at least 20 percent.
If you refinance from an interest rate of 3.17% to 1.89% through ME Bank, you can get $3000 cashback plus, you’ll save yourself $60,509.84.
Welcome to the world of remortgaging – its such a burgeoning industry that incentives and savings seem almost too good to be true.
It isn’t just the major lenders that are offering people incentives. You can get similar deals through smaller lenders, or lenders who only have an online presence.
New entrant 86 400 is giving customers $2,000 cash back when they switch from a home loan rate of 2.54% to a rate of 1.84%. Customers can also save $61,601.56 over the lifetime of the mortgage.
Sounds like a no brainer, doesn’t it? But wait, there’s more…
When you switch from an interest rate of 3.15% to 2.39% through Heritage Bank you’ll get a partial offset account and flexible repayments. You could also save $46,954.14.
If you currently pay an interest rate of 2.54% on your mortgage through Great Southern Bank and switch to a rate of 2.49%, you’ll get $3,000 cash back and save $43,533.43 in mortgage repayments.
All of these savings are based on a mortgage of $250,000 with a 20% deposit.
With economic uncertainty caused by the COVID-19 pandemic, home loan refinancing has been at an all-time high.
Smartline Mortgage Advisor, Wayne Dive said that most of his clients have been seeking a review of their existing mortgage due to a reduction in interest rates.
He noted that most clients have been looking for fixed interest rates and that they’ve been looking to save money on the cost of their repayments. Most of his clients have switched to four-year fixed rate terms.
Mr Dive said that he’s only had one client who was in financial hardship so they approached their bank and were satisfied with the outcome.
His advice to anyone considering refinancing is to “consult with an advisor that offers choice and takes an interest in your overall needs. Ask open questions and seek responses”.
He highlighted the importance of understanding the loan and your needs. He acknowledged that it’s hard to look to the future but when you’re taking out a loan or refinancing, you should think about tomorrow, or the next five years, not just today.
He constantly reviews his clients’ mortgages and makes sure he’s with them all the way.
“It’s not just a wham bam thank you, ma’am. It’s taking an interest and looking at who you deal with.
“Rather than saying ‘I feel comfortable with a certain bank’ you should compare the others. You may still feel comfortable with your original choice, but perhaps there’s better. You need to make a choice and it’s about being offered the choice”.
His sentiment is shared by Taylor Blackburn, a Personal Finance Specialist at Finder.
He said that if people are struggling to pay their mortgage they should contact their mortgage broker to see if they can get a better deal.
“If you haven’t done it recently, the cash rate is at an all-time low. A lot of lenders have competitive rates.”
He said that you should compare rates. If your bank can’t give a high enough reduction or if you’re experiencing hardship then you need to compare your other options.
“Finder has a tool on their website that compares fixed, variable, split, 1, 3, and 5-year rates. We have all of them listed on the site, so you can see how much you can save. Some banks offer $3,000 cash-back”.
Blackburn commented that “we were just looking at refinance rates and they have hit an all-time high. That includes people refinancing with their bank. The numbers in the last two years have just gone up and up.”
“You’ve got better rates than you’ve ever had and I guess the consensus is that rates will stay low but not forever.”
“The RBA has hinted that the cash rate won’t go up for the next one or two years because of inflation and unemployment”.
He warned that banks often raise rates out of cycle, so just because the cash rate stays low doesn’t mean your mortgage rate will stay low.
He advised that “the best thing you can do is vote with your feet and if you don’t feel as if you’re getting a good deal, you’re probably right.”
Finder’s research found that a person with an average mortgage of $500,000 can save up to $290 per month, which equates to $3,480 annually.
He expects the flurry of refinancing to continue because people are looking to save money.
“Just by refinancing even 10 basis points will make a difference to your pocket and the refinancing rat race will continue for some time while people try to get the best rate they can.”
Even if you do not get an immediate incentive through refinancing your home loan, you can still save yourself a significant amount of money.
Those savings could either be used to renovate your home or pay for the deposit on an investment property.