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Why you should think about refinancing
How to save more than $60,000
Let’s start with all the variable-rate investors out there. For the sake of the exercise, we’ll assume you’ve got $300,000 left on your mortgage, paying principal and interest with an outstanding loan term of 25 years.
As of 1 November, the average variable investment loan is 4.90 per cent, according to the RateCity.com.au data.
Yet there are so many lower-rate options out there – including these three:
| Lender | Product | Advertised rate | Comparison rate |
| Reduce Home Loans | Rate Buster Wealth Maximiser Loan | 3.69% | 3.69% |
| Pacific Mortgage Group | Standard Variable Investment Loan | 3.79% | 3.79% |
| Homestar Finance | Variable Rate Investment Loan | 3.79% | 3.83% |
What’s the difference between a loan priced at 3.69 per cent and one priced at 4.90 per cent? Well, over a 25-year term, the difference in repayments is $203 per month or $61,117 over the life of the loan.
This kind of savings speaks for itself.
Fixed-rate borrowers can also save big
If you’re the fixing kind, there are still plenty of opportunities to save, provided you’re not currently in the middle of a fixed-rate contract and you’re happy to pay principal and interest.
While the average rate for three-year fixed investor loans is 4.55 per cent, there are, again, plenty of lower-rate alternatives:
| Lender | Product | Advertised rate | Comparison rate |
| Switzer Home Loans | Fixed Rate Loan 3 Years | 3.92% | 3.90% |
| Virgin Money | Reward Me Investment Loan Fixed 3 Years | 3.99% | 4.27% |
| Bank of Queensland | Standard Fixed Rate Investment Loan | 3.99% | 4.91% |
Over 25 years, the difference between paying 3.92 per cent and 4.55 per cent would be $106 per month or $31,720 over the life of the loan.
Does your investment loan start with a ‘3’?
It needs to be stressed that the cheapest product isn’t always the best. Depending on your personal circumstances, a higher-rate loan might be more appropriate.
That said, you need to ask yourself serious questions if your investment mortgage has a ‘4’ or even a ‘5’ in front of it.
So shop around and punch some numbers into a mortgage calculator. You might be surprised to discover just how much you can save – which means you could either pay off your mortgage faster or accumulate the deposit for your next investment property ahead of schedule.
