You can save hundreds of dollars a month now, but get it wrong and it could cost you thousands.
A mortgage holder with a $1 million home loan on a variable rate of 6.5 per cent would have monthly repayments of $6,244.If they refinanced to a rate of 5.75 per cent, repayments would drop $459.Home owners who locked in cheap mortgage rates two years ago and are now rolling off can save cash by renegotiating, but experts warn against options that will cost more in the long term.
If they opt to haggle with their bank to get a 0.5 percentage point reduction, as their first port of call, their monthly repayments would drop by $308. “A bank can hand out a rate cut in the space of a day. Get the rate cut when you can, a refinancing application can take up to six weeks,” she said. “Go through the process of finding out if refinancing will save you more money. Banks reserve their sharpest rates for new customers. It’s worth checking.”
The last resort for struggling mortgage holders would be to extend the life of their loan, experts said.
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