Hi Nicole, You often write about refinancing away from the four major banks and the cheap interest rates offered by some others in the mortgage market. To be fair, I just didn’t bother doing it. It seems complicated and too many traps appear. Hoping you can give me some financial motivation and some shortcuts to get the job done! Sandra.
Hi Sandra. Money talks, as they say, so let’s start there.
You don’t say the amount of your mortgage, which is the key, so I assume this is the average amount refinanced today, according to the Australian Bureau of Statistics, of $ 441,725. If it is more, you will save more.
You also don’t say which bank, so we’ll use what data house Mozo says, the average mortgage rate is – 3.6 percent for a big-four discount rate (which comes on packages that require you to pay an annual fee of about $ 400) .
That rate is comparable to a “best-in-market” mortgage rate of 2.17 percent from Well Home Loans.
Tic: tok comes in a close second, at 2.19 percent, and has an even comparison rate – which reflects all prepaid and ongoing fees – of 2.2 percent.
These rates are comparable quality loans to the big four providers as they are backed by a recognized depository institution and therefore come with real mortgage accounts (These cost $ 10 a month with both lenders, which is well worth it).
With your current mortgage, you pay $ 2,235 per month. Refinancing would drop that to $ 1909 – a monthly savings of $ 326 and an annual savings of $ 3912.
What if you’re not on the discounted rate, but pay the much higher big-four rate of 4.51 percent? You would save $ 549- $ 6588 per year on a monthly basis.