How Sarah Saved $47,000 by Refinancing Her Home Loan
A real case study of how one homeowner reduced her interest rate and restructured her loan to save big.
Raj Bhangu
Principal Mortgage Broker
Key Takeaways
- 1Sarah saved $47,000+ over her loan term by refinancing from 6.89% to 5.89%
- 2Monthly savings of $350 plus $2,000 cashback from new lender
- 3Total refinancing costs were just $550 - break-even in less than 2 months
- 4By maintaining original repayments, Sarah will be mortgage-free 4 years earlier
- 5If you haven't reviewed your loan in 2+ years, you're likely paying too much
Sarah J. from Sydney came to us feeling overwhelmed. She'd been with the same bank for 8 years and suspected she was paying too much. Here's her story.
Sarah's Situation
- Original loan: $520,000 remaining on a $650,000 property
- Current rate: 6.89% (variable)
- Monthly repayments: $3,420
- Loan term remaining: 22 years
The Problem
Sarah hadn't reviewed her loan since taking it out. Her bank had quietly increased her rate while offering new customers much better deals. She was paying almost 1.5% more than she needed to.
What We Did
Our refinancing specialists compared 40+ lenders and found Sarah a much better deal:
- New rate: 5.89% (variable)
- Monthly repayments: $3,070
- Monthly savings: $350
- Bonus: $2,000 cashback from the new lender
The Total Savings
Here's where it gets exciting:
- Annual savings: $4,200
- Savings over remaining loan term: $47,000+
- Plus: Sarah chose to keep paying $3,420/month, which will have her mortgage-free 4 years earlier
Refinancing Costs
Sarah did have some costs to refinance:
- Discharge fee from old lender: $350
- New lender application fee: $0 (waived)
- Settlement fee: $200
- Total costs: $550
- Break-even: Less than 2 months
Could You Be Saving Too?
If you haven't reviewed your home loan in the past 2 years, you're likely paying more than you need to. Use our refinancing calculator to see your potential savings, or book a free consultation for a personalized assessment.
*Name changed for privacy. Real client case study with permission.
Related Tool
Refinancing Savings Calculator
Calculate how much you could save by switching to a lower rate.
Sources & References
This article references information from the following authoritative sources:
Raj Bhangu
Principal Mortgage Broker
Expert mortgage broker helping Australians achieve their property dreams with personalized home loan solutions.
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As a mortgage broker, iSmart Finance receives commissions from lenders when we successfully arrange a home loan. This does not affect the interest rate or fees you pay. Our service is free for you, and we're committed to finding the best loan for your needs.
About iSmart Finance
iSmart Finance Group ACN 608 986 554 is Credit Representative 481761 of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237). We are members of the Finance Brokers Association of Australia (FBAA) and comply with the National Consumer Credit Protection Act 2009.
Our content is based on industry expertise, regulatory guidelines from ASIC and APRA, and data from the Reserve Bank of Australia. All information is current as of the publication date and subject to change.
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