Re­fi­nanc­ing loans

Rea­sons it makes sense for so many

Monthly Chronicle - - Business - SAN­DRA DIGNAM San­dra Dignam is a qual­i­fied Mort­gage Bro­ker and Man­ag­ing Di­rec­tor of Ev­ery Loan, as well as a mem­ber of the Fi­nance Bro­kers As­so­ci­a­tion of Aus­tralia.

Ten years ago, I met a most de­light­ful woman whom I found a se­niors loan for - oth­er­wise called a re­verse mort­gage. She had the most adorable tim­ber cot­tage that matched her bubbly per­son­al­ity and which she had de­signed her­self. The cot­tage nes­tled into the veg­e­ta­tion and a flo­ral trimmed tim­ber deck and sunny sit­ting room over­looked a lush and fern-filled gully. She had the whole house filled with quaint sou­venirs from all over the world which were a trib­ute to her trav­els, and she had no de­sire to ever leave her beau­ti­ful haven and the won­der­ful gar­den she had cre­ated. She wanted to take some of the eq­uity from her home to add to her life­style and trav­els.

Re­cently she called me again as the ten year loan term had passed and she now needed to re­new her loan. She wanted to take out ad­di­tional eq­uity and do more trav­el­ing. The value of the home had in­creased and she was now 10 years older so her cir­cum­stances now qual­i­fied her to take a new re­verse mort­gage, a bet­ter loan with a spe­cial­ist se­niors loan provider at a lower in­ter­est rate and with no on­go­ing fees. This new loan pro­vided her with her up­dated needs.

Why re­fi­nance? Rea­son No. 1 for re­fi­nanc­ing is to bring your loans into line with your cur­rent po­si­tion and needs

This week I met a cou­ple who have down­sized into a peace­ful, mod­ern gar­den com­plex. Like so many, they had found it harder and harder to keep up with pay­ing the daily expenses on the pen­sion. They had a re­verse mort­gage with a ma­jor bank and high-in­ter­est credit cards with in­creas­ing bal­ances. Re­fi­nanc­ing their re­verse mort­gage with a spe­cial­ist lender at a lower rate and no on­go­ing fees, as well as in­cor­po­rat­ing the credit

card debt into the re­verse mort­gage, will save them sev­eral thou­sand dol­lars in in­ter­est and fees in the first year - and ev­ery year af­ter that! They will now be free of in­creas­ing credit card re­pay­ments and have enough sav­ings to take a hol­i­day, or ren­o­vate, or ful­fill some wish from their bucket list.

Rea­son No. 2 to re­fi­nance is to con­sol­i­date debt, and make re­pay­ments eas­ier, re­duce in­ter­est and fees, and save money

It re­ally is worth the ef­fort of hav­ing your loans as­sessed by a qual­i­fied fi­nance and mort­gage bro­ker who has ac­cess to a large spec­trum of loans. Many bro­kers will pro­vide this ser­vice at no charge and will be able to sug­gest bet­ter op­por­tu­ni­ties to save

money if you re­fi­nance to a bet­ter loan.

Take the young fam­ily strug­gling to meet the mort­gage re­pay­ments each month while pay­ing all the mount­ing expenses of rais­ing chil­dren. If they have a mort­gage of $500,000 and an in­ter­est rate of 4.5%, they will pay $1,875 ev­ery month just in in­ter­est. If they re­fi­nance to 3.89% they would pay $1,620 per month in in­ter­est and save $254 ev­ery month that can be spent on other things for the fam­ily. That is a sig­nif­i­cant saving - $3,050 in one year – enough to go on a fam­ily va­ca­tion. What about an even lower rate of 3.69%? Now the saving in in­ter­est be­comes $4,050. Sup­pose their

cur­rent in­ter­est rate is higher, say 5%, then the sav­ings from re­fi­nanc­ing go up to $6,550. What

could a fam­ily do with an ex­tra $4,000 to $6,000 a year? Per­haps con­sol­i­date a credit card or two that sim­ply seemed to grow in­stead of get­ting cleared, and the sav­ings get even big­ger. This should en­cour­age ev­ery home­owner to get their home loan as­sessed reg­u­larly with an ac­cred­ited Fi­nance and Mort­gage ex­pert.

Rea­son No. 3 to re­fi­nance is to save in­ter­est

That way you can use your money for bet­ter things and more im­por­tantly to stop giv­ing the al­ready rich banks more of your money than you need to.

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