Savvy Australians could save themselves hundreds of dollars a month or thousands a year just by picking up the phone to their bank or their lender and asking for a better deal.
According to new data from Finder, one in three – or about 986,000 – Australians are intending to refinance their mortgage in the next year.
By wrangling a better deal, these homeowners stand to keep on average $395 a month or $4,740 a year, which comes to $398 million altogether.
And if borrowers are quick, that could mean more than $1,000 in savings between now and Christmas.
Also read: RBA hints at rate cut within weeks
These figures are based on an average mortgage of $400,100 with an interest rate of 3.99 per cent, where repayments are $1,908 a month.
This debt refinanced to a 2.17 interest rate would see borrowers pay $1,513 a month.
In a time of record-low interest rates, that makes now the time to switch – especially as every dollar matters, said Finder insights manager Graham Cooke.
“The pandemic has made people assess where every dollar they earn goes and refinancing a mortgage can lead to a huge leap in savings,” he said.
“Borrowers see record low rates and don’t want to be stuck paying more for their mortgage than they need to.”
The Reserve Bank has signalled that interest rates could move even lower, with many now expecting the official cash rate to be cut to 0.1 per cent on Melbourne Cup day.
Nearly one in ten have already seized the low interest rate environment to refinance.
Lenders are increasingly tempting borrowers to refinance with cashback offers, with St George Bank, Bank of Melbourne and Bank of SA offering to deposit as much as $4,000 for settling your home loan.
But while many of these deals can offer great value, Cooke urged borrowers to read the fine print.
“A sharp interest rate and minimal fees can save you more money than a one-off $1,000 cashback in the long run,” he said.
Those planning to refinance can either switch loans with their current lender, or go to an entirely new lender altogether.
And if you can actually comfortably afford the repayments you’re paying now, you can save yourself more money in the long run by switching to a lower rate but keep repayments the same.
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