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In our post-COVID environment, many of us are finishing our (amazing) ultra-low mortgage interest rates (~2%) and are being rolled onto something a lot higher, and a lot more painful (~6%). This is creating repayment pressure in households and property portfolios across our great nation.

As a result, many people are turning to a strategy called ‘mortgage refinancing’. This is a strategy where your mortgage is reviewed, and ultimately updated in some way, so you pay less each month. If you’d like to learn more about the basics of refinancing, checkout our earlier article and podcast about refinancing here.

However, if you have questions like:

• How much will a mortgage refinance actually save me?
• How easy is it to refinance my mortgage?
• Can I refinance without changing banks?
• Is my situation too complicated to be able to refinance?

…then the three case studies below might provide value to you.

In the sections below, I’m going to explore three specific ways in which we’ve helped our clients review and refinance their mortgages, so they feel much less payment pressure each month.

Perhaps your situation might be similar–and if so, please reach out for a Finance Strategy Session where we’ll give you our smartest strategies for helping you pay less each month (this could be a simple mortgage review, or a complete refinance, depending on your situation–let’s chat to decide the best way forward).

Refinancing Case Study 1: Loan Review

In this case study, our client approached us with a loan of $600k owing on a property worth $850k. They were paying “principal and interest” and an interest rate of 6.49% (about $3,245 interest per month).

After reviewing these details, we approached the client’s current lender and asked them to conduct an internal loan review, with the goal of securing a lower interest rate. As part of this process, we requested something lenders often call ‘pricing’, which is where they provide the best interest rate they will offer, based on a range of factors.

Not long afterwards, the lender came back to us with a new interest rate of 6.19%, or $3,095 interest per month, which means our client was able to save $150 per month in their interest charges (equating to $1,800 in the first year).

It’s also important to note that during pricing requests, lenders will generally not reduce direct debit repayments. This means that $150 saved in interest will instead go straight into pay down the client’s ‘principal’ debt – accelerating the repayment of their home loan.

In this scenario, a quick chat with the client’s lender ended up saving them $150 per month in repayments.

Refinancing Case Study 2: Loan Refinance

Our client approached us with a loan of $600k owing on a property worth $850k. They were also paying “principal and interest” and an interest rate of 6.49% (about $3,245 interest per month).

In this case, we contacted the client’s current bank to complete a loan review. However, the bank denied our request to sharpen the interest rate (which was at 6.49%). This meant the bank would continue to charge the client an ‘above average’ interest rate.

With that in mind, we ran through some lending options and found a lender who was willing to ‘refinance’ the client’s home loan over to a lower interest rate.

However, whilst the lower rate is fantastic, we also needed to consider the costs below to ensure this was worth refinancing:

• Discharge of the current loan ($395)
• Annual Package Fee on the new loan ($299)
• Settlement Fee on the new loan ($299)

The ‘upfront’ fees sat at $993. The total monthly cost in interest saved by refinancing is $175 (or $2,100 per annum).

In this scenario, it would take six months for the clients to recover the cost of the move and officially be in the green zone of benefitting from the change.

In this scenario, refinancing the client’s loan with another bank ended up saving them $175 per month in interest. 

Refinancing Case Study 3: Refinance & Loan Extension

In this case, the client had a loan of $600k owing on a property worth $850k. They were paying “principal and interest” and an interest rate of 6.49% (about $4,470 interest per month, based on twenty years of their loan term remaining).

In this scenario, our client contacted us in a panic. Their fixed rate had ended, and their bank had rolled them onto a high variable interest rate. This high rate, combined with the client’s remaining loan term had resulted in their repayments significantly increasing.

This client noted an intention to refinance their home loan to find a better interest rate. They had not considered the power of extending their home loan until they met with Trilogy Funding.

In this instance, an extension of the loan term was in their best interest to ensure they could comfortably continue with their current commitments. Extenuating circumstances meant the couple’s household income had decreased in the last few years, changing their financial goals and objectives.

Following the meeting, we were able to secure a lower interest rate (6.14%p.a.), extend their loan’s term, and save them around $818 per month.

Here are the costs of refinancing:

• Discharge of the current loan ($395)
• Annual Package Fee on the new loan ($299)
• Settlement Fee on the new loan ($299)

The ‘upfront’ fees of this refinance sat at $993. In this scenario, it would take only two months for the clients to recover the cost of the move and officially be in the green zone of benefitting from the change.

In this scenario, refinancing the client’s loan with another bank, and extending their loan term, ended up saving them $818 per month in interest. 

(The numbers used in these examples are purely on the interest cost charged by the bank. The principal repayment will add onto this as standard, however when we are talking saving money, we would always be talking interest costs saved.)

So, can anyone refinance their mortgage?

It’s also important to note that not everyone can refinance their mortgage.

However, there is still hope–which is where Trilogy Funding comes in.

If this is the case, we’ll do our best to request a loan review and negotiate better conditions for you, with the goal of implementing a more impactful loan refinance in the future.

Helping you decide if refinancing is a smart move

As you’ve seen above, refinancing can save you money in the short term by reducing your regular repayments. If you’re seeking ways to pay less each month, refinancing could be a viable strategy for you.

An experienced broker like Trilogy Funding can help with your refinancing strategy. Specifically, at no cost to you, we’ll help with:

• Cost analysis: We’ll help you analyse the costs and benefits of refinancing, including fees and savings.
• Loan comparison: We’ll compare various loan products from multiple lenders, including loans and rates that other brokers may not be able to secure for you.
• Portfolio strategy: We’ll take a big-picture look at your property ownership goals, and make sure your current loan doesn’t restrict any future lending ambitions (eg. avoiding cross-collateralisation)
• Application assistance: We’ll help with completing and submitting the loan application.
• Paperwork management: We’ll handle the necessary paperwork and documentation.
• Credit advice: We’ll offer advice on improving credit scores for better loan terms.
• Ongoing support: We’ll provide ongoing support and advice throughout the refinancing process.

Additionally, we’ll conduct regular rate reviews, which can lead to substantial rate reductions.

In some instances, even if immediate refinancing isn’t possible or beneficial, we might be able to suggest alternative strategies to reduce interest rates or improve loan terms in the near future.

These might include engaging with different lenders or adjusting your loan’s structure to better suit your financial situation.

Your next step: Request a Free 30-Minute Finance Strategy Session

If you’re looking for an expert team (and a broker with premium status) to help you refinance one of your mortgages, request a Free 30-Minute Finance Strategy Session during which you will…

• Get a realistic understanding of your current situation… and how much you might be able to save via a refinance
• Get a better understanding of the lending options available to you
• Discover ways to save money on interest, fees, and charges that are specific to your unique situation
• Get an up-to-date picture of the lending landscape including rates, conditions, and how to structure loans
• Learn about our process to find you a loan that could save you thousands.
• This no-obligation free session will be held with one of our experienced mortgage brokers.

This no-obligation free session will be held with one of our experienced mortgage brokers. Please be assured this will not be a thinly disguised sales presentation. On the contrary, you’ll receive our best strategic advice, specific to your situation, so you too can accumulate multiple properties without sacrificing your current lifestyle and accelerate your progress towards wealth.

Schedule Your FREE 30-Minute Finance Strategy Session Today.

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Please note, the numbers and assumptions listed in this article are for educational purposes only. Individuals should seek specific advice pertaining to their unique situation and the real estate market before making any decisions.

Trilogy Funding Two is a corporate credit representative (Representative Number 506131) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237)