Ever wondered how lower home loan interest rates can change your life? Your home loan is most likely the biggest financial commitment for most Australians. The interest rate charged by your bank is the main long term cost of your home loan. Have you ever thought about what even a small change in interest rates can mean to this cost? You could be saving thousands on your home loan.
Let’s look at a $400,000 home loan over 30 years, with weekly repayments. Comparing an interest rate of 4.5% per annum and 3% per annum.
At an interest rate of 4.5% per annum, you would pay the bank $329,627 in interest over the life of the loan. Therefore, as a result of the lower interest rate of 3%, the interest payment to the bank would be $207,110 and you would save $122,517!!
Wow, that is a real eye-opener.
See for yourself how much interest rates affect what you pay on your loan. Go to our Loan Comparison Calculator here and see how lower interest rates can change your life.
Pay your home loan off sooner
Another tip to save money is to not only change to a better interest rate, but also to continue making the same level of repayments that you were paying on the higher interest rate loan.
Let’s say that you had 25 years left to run on your home loan and you made the switch from 4.5% to 3% on that loan of $400,000. As a result of keeping the repayments the same, you could save over $132,000 in interest and pay your home off 5 years sooner.
See our mortgage switching calculator and see how lower home loan interest rates can change your life.
You could be saving thousands on your home loan interest costs, speak to one of our specialist brokers today.