We are told from a young age that the quality of loyalty is an important one to develop within ourselves. And in Australia, with the almost mythological status we place on the loyalty of mateship, it is also prized as the sign of a truly trustworthy and honourable character.
However, perhaps this old piece of wisdom is not always true or suitable in all situations? Especially when it comes to being loyal to our bank just because we feel it is the right thing to do. In fact, recent evidence has shown that for many Australians with loans, our loyalty could be costing us tens of thousands of dollars over the life of our relationship with our bank. Because even though we Aussies are very likely to shop around for the best interest rates at the time of taking out our loan, we are also equally likely to stick with our bank even if we can get a better rate elsewhere.
So the question has to be asked, “Is your loyalty to your bank costing you big time?”
For me, this is definitely the case when it comes to the interest rate on your home loan. Especially as a small difference in your interest rate can make a big difference to your total repayments. Therefore perhaps it is time to review your current home loan and look into refinancing with another lender?
This is where your qualified Mortgage Coach can easily help you with identifying refinancing options. And the process is not as difficult as you might think when you are in the hands of someone who knows how. Better still, by taking this one step alone you could literally save yourself tens of thousands of dollars, or more, in the long term.
For example, if we look at a few simple home loan scenarios, it’s easy to see how a simple switch to a lower rate of just 0.5% to 1% you could start saving thousands of your hard earned dollars straight away.
- On a home loan of $450,000 with an interest rate of 4.44%, over 30 years, your monthly repayments would be $2264 per month and your total repayments would be $815,065.
- On a home loan of $450,000 with an interest rate of 3.94%, over 30 years, your monthly repayments would be $2133 per month and your total repayments would be $767,820.
- On a home loan of $450,000 with an interest rate of 3.44%, over 30 years, your monthly repayments would be $2006 per month and your total repayments would be $722.037.
Now looking at these figures, if you can achieve as little as a 0.5% reduction in your interest rate, you could save yourself the tidy sum of $47,245. Which is a great result in my book.
However, it gets really interesting if you can gain a 1% reduction in your rates, because as you can see, this could equate to a whopping $93,028 saving across the life of your loan. And that is a fantastic result for anyone.
So my advice to you this week is to consider switching from an outmoded sense of loyalty to your bank, to a greater level of loyalty to yourself and your finances. Because with refinancing as a very real and viable option, you’ve really got nothing to lose and everything to gain.
As always, feel free to call us at Mortgage Coach to discuss your refinancing options.
Until next time champions, Stay loyal to yourselves.