CASE STUDY 1
Single income family with mortgage - saved $1,946 per month
Rod & his wife had a home loan, 3 credit cards, and a personal loan. The trouble was, even though Matt was on a pretty good income, his wife wasn't working, so that one good income was not a huge amount for a family of four. The credit cards were maxed out and cash flow was pretty tight - between the mortgage and the other debts, they were paying $3,820pm - and because the home loan was interest-only, and the credit card payments were the minimum only, they weren't making a dent on the overall debt!
By refinancing to another Lender, we managed to get them a variable rate of 2.99%, $2,000 cash-back (which covered the break-costs to get out of their existing fixed-rate loan), consolidated & closed his credit cards & personal loan, and borrowed an extra $8k for future needs. All of for a repayment of $1,874pm - saving them $1,946 per month! And even better, this loan is now principal & interest, so the overall debt is now reducing, and they are on track to own their home, and pay off all the other debts, well before retirement.
This has made an incredible difference to their cash flow and therefore quality of life. Some of their newly available cash each month (about a third) is being used to make extra payments off the loan - this will reduce the loan term by 9-years, and save them about $76,000 in interest. And they will still have an extra $1,200 per month in their pocket!
CASE STUDY 2
Client with investment property - saved $282 per month
(equivalent to putting up the rent by $65 per week)
NOTE: There’s only 2 ways a landlord can increase cash-flow & profits – either by putting up the rent (not always easy) or reducing overheads (e.g. interest payments).
David owns an investment property in Brisbane - the loan balance is $360,000. He has had it for 4 years, and it's interest-only to maximise cash-flow, as many investors do. He doesn't get a great return on his investment, but it's not terrible (he had to reduce the asking rental price to get a tenant, and he doesn't want to put up the rent because they are great tenants and he doesn't want to lose them).
In late 2018, David noticed that the rate on this loan had crept up it was now at 5.09%. We looked at current rates available for INV and IO, at the time, and found we could secure him a 4.15% rate, fixed for 2-years. At the time, his current I.O. Repayments on $360,000 at 5.09% = $1,527 per month.
When we refinanced, his I.O. Repayments on $360,000 at 4.15% = $1,245 per month - that’s a saving of $282 per month, or $65 per week!
Now, you could try putting up the rent by $65 pw, but I don't think you'd keep your tenant - much easier to speak to your broker & save on your repayments.
Also, over a 30-year loan term, that’s potentially a saving of $101,520 in interest payments.
CASE STUDY 3
Self-employed business client with commercial mortgages - saved $6,589 per month!
Steve & Pat own 2 factory units on the Gold Coast - they were paying $12,829 pm in repayments, and a rate of 6.02% for both. Despite many requests to reduce the high rates, their lender refused and was not interested in keeping them from leaving, so they left. We were able to refinance them to a new lender at 3.52% over 20 years, with repayments of just $6,240pm - that's a saving of $6,589 per month.
Imagine if you could save thousands of dollars a year, just by talking to our in-house finance broker - it's certainly worth some thought!