Refinancing case study

Let’s see how this works in practice.

Mortgage holders: Michael and Fiona

Loan: $259,000 lo-doc facility with one of the major four banks Interest rate: 6.39%

Other debt: $44,000 (credit cards and personal loans with rates from 9%-20%)

The couple wanted to refinance to reduce their monthly repayments. After a comprehensive discussion with a lender about their current circumstances and goals, they were recommended a loan with a rate of 4.99%.

Savings: $3,200 per annum on their home loan, over $1,300 per annum on their credit card and personal loan debt.

Total: $4,500 per annum

There were costs involved for refinancing their debt; however, it still worked out to make more sense financially.

One-off costs: $265 for a valuation fee, $395 for lender’s legal costs

There were no application or servicing fees, and Michael and Fiona could see how these costs would be outweighed by the longer term savings.

This article is from Property Observer's free ebook Mastering the Art of Refinancing: 12 tips for success and key things to consider.


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