Are you aware of your current interest rate?
Have you checked your home loan interest rate in the past year and a half? Chances are that you might be paying more interest than the average Australian.
According to Digital Finance Analytics, during the month of March 2017 a discounted variable interest rate was sitting around 4.55% per annum, 4.85% the previous year and 6.70% about five years ago. Showing a considerable shift in both variable and fixed loan options. More recently home owners have seen a dramatic change in the way the Australian mortgage market prices its residential loans. This is due to several factors namely the change in banking policies and the introduction of APRA’s powers (Australian Prudential Regulation Authority) tightening up on investor lending.
In an extremely competitive mortgage market and in probably one of the most systematic introductions; these variation in mortgage interest rates are leaving home owners awfully confused on where their current loan should be sitting at to be considered a valuable offer?
With Interest being calculated daily, you very well could save yourself thousands just by making the switch to carry out a health check or review.
So should you look into refinancing?
Experts in the industry suggest that if the savings from refinancing will offset any costs associated with the transaction within the first 2 years it is worth it!
Another point to take note of when considering a refinance, is that the whole 30-year term starts again. If you only have a few short years left on your mortgage it may not have the benefits you are thinking.
At the beginning of a mortgage, a larger part of each repayment is applied towards the interest, which means you will not be paying off as much towards your home.
It might be worth considering the bigger picture especially if you have not reviewed your home loan within the past 12 months.