Money asked data house Mozo for the 10 best mortgages for homeowners on the market.
The cheapest – from Home loans good, which distributes the Bendigo Bank-product backed – comes in at an incredible 1.85 percent.
Just a mustache behind is Police credit union and TIC Knock (also a white label Bendigo Bank product), at 1.89%.
The comparison rate, which takes into account fees and is crucial to consider, is slightly lower at Police Credit Union. Tic: Toc’s rate is impacted by a fee of $ 10 per month for its clearing account.
It’s quite competitive, as the big banks charge at least double for it in their mortgage products.
Bendigo Bank itself has an identical comparison rate to Tic: Toc. This means that Bendigo Bank offers three of the four best quality mortgages!
It is not fair or you are refinancing what is essential for huge savings. It is also How? ‘Or’ What you are refinancing.
A common mistake is to favor the short term over the long term… and to contract a loan over a new period of 25 or 30 years. Of course, this will lower your monthly mortgage payments, but even with the interest rates coming down, you will be guaranteed to pay a huge amount in additional interest over the new term of the loan.
A much smarter strategy is to keep the loan term the same as you already have, so you end up pocketing the savings.
The smartest strategy of all is to refinance over the same loan term at a much better mortgage interest rate, and then keep your repayments at their current level.
Say you move a $ 400,000 home loan from the Big Four Bank average flat rate of 3.45% to the dominant market rate of 1.85% (we’ll assume you have 25 years left on the loan).
By making a direct change, this brings your total interest bill over the new loan term to $ 99,908. If you had stayed on your old 3.45% rate, you would have spent almost double, at $ 197,536.
However, if you keep your repayments the same as the old loan, you not only save money but also time. In other words, you get rid of your debt much sooner.
Make the switch and keep making the same repayments and your interest bill drops to just $ 79,033. And remember, you are used to paying this amount every month anyway.
Better yet, your debt falls by four years. Essentially, for free.
- The advice given in this article is general in nature and is not intended to influence readers’ decisions regarding investments or financial products. They should always seek their own professional advice that takes their personal circumstances into account before making financial decisions.