As the cost-of-living rises, Australians will be looking for ways to release some steam from the kettle pot. For many, having a look at their existing finances is the first step. Small things like checking in on your everyday expenses can be a simple place to start, but when bigger matters like home loans are thrown into the mix, things can get a bit trickier to handle. Luckily, we’ve got a quick run-down on the things you’ll want to know when working with home loans.
To refinance or not to refinance, that is the question
Back in the day, taking out a home loan meant keeping that loan for the next 25-30 years. But times have changed, lenders are offering sweeter packages, and refinancing is more and more common. With movements in interest rates, refinancing your home loan could be a savvy move to help get ahead and ease the everyday costs of living.
In general terms, refinancing is taking your existing home loan and replacing it with a new different loan, all with the aim of getting a better deal than the one you have. And nothing trumps finding a sweet home loan deal. Well, maybe a decent 2-for-1 combo from the local Chinese take-away down the road could do the trick.
We’ve written a bunch of articles that get into the 101 of the refinancing process, and the things to keep in mind depending on your situation and what you’re after but the gist is, if the benefits outweigh the costs and fees of refinancing, it can be a smart way to help save you money and something you might want to pursue. Now that sounds decent.
Our Variable rate home loan refinance calculator is a handy tool to help you understand your current situation, and whether it may be beneficial to shift this. We’ll need some key pieces of information about your current loan to calculate a comparison to give you an idea of the amount you could save in interest repayments over the remaining term of your loan.
Thank future you with extra repayments now
When interest rates look to rise, doing the math on how to make your future repayments work in the midst of everyday life can make you feel like you’re back in year 9 math class again. Thankfully we’ve got tools (and calculators) to make it clearer.
To get ahead of the curb, many home loan owners will consider making extra repayments in the meanwhile with the current interest rate. Making repayments above your minimum could make a big difference to how quickly you could pay off your home loan without
Depending on your current financial position, it may be worth considering – the ING Extra Loan Repayments Calculator is a helpful tool to see what this could look like for you.
Offset with an offset
Life can be unpredictable, and as things become more expensive, it’s a good idea to try and have sufficient savings set aside (or a rainy-day fund) for when things go awry.
But like committing to waking up at 4:40 in the morning for a big run, having and growing savings can sometimes be easier said than done. There are a few tactics you can consider adding to your tool kit though.
Start by setting yourself an achievable figure and look for ways to create a savings habit. Whether it’s committing to putting away $25 or $200 a week, a small savings commitment like this can be simple enough for your goals.
Another simple tactic is to ask your employer to pay part of your salary into a separate savings account. For some, having this money in a safe space, out of sight and out of mind is an effective technique to grow your money. It’s like an adult version of having multiple piggy banks.
On top of this – customers with a home loan can actually make these funds work harder for them in an offset account. Really, really simply, an offset account is a separate bank account linked to your home loan; the balance of this offset account is deducted from (or ‘offset’ against) the value of your loan when interest is calculated. Plus, you can still access the funds in an offset account, for when you need it.
For more info on offset accounts and how it could work for you, check out our guide here.
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