Here’s How Refinancing Maxim’s Mortgage Will Save Him Up To $80,000
Categories: Home Loans
When Max purchased his off-the-plan apartment in 2012, the Commonwealth Bank seemed like an obvious choice. He was a loyal customer, had multiple accounts with them, and was yet to have a bad experience. Quite simply, taking out a home loan with CBA made a lot of sense.
“I picked them as the obvious option because I had accounts with them. But as I was repaying my loan, I started talking to other homeowners and quickly realised that the interest charged by Commonwealth is quite high in comparison to other financial institutions and other lenders.”
Max began the long and arduous process of researching interest rates, and discovered that due to the structure of his loan, he had only been paying off the interest on the mortgage, rather than the principal and interest. This had led to him being charged an even higher interest rate.
“This got me thinking that I really needed to start paying off my principal. And secondly, given that interest rates are sitting around 1.5%, it won’t last forever so the more principal I can pay off before it increases, the better I’ll be in the long run.”
Using CANSTAR to compare rates, Max found that the lowest rate was with Reduce Home Loans. He approached them and began filling out paperwork, but very quickly came across some roadblocks. In order to proceed with the application, Reduce needed certain employment documentation that Max couldn’t provide because he works for a startup that is headquartered in the United States. Despite having a great credit score and demonstrating his strong financial position, it was proving too difficult.
And then Max heard about Loan Dolphin.
“I just decided to register. It was super easy and I was really impressed by the fact that it only took me 5 minutes to sign up, setup my profile and go online for the bidding process. It’s like fishing – I was just sitting and waiting for the offers to come through.”
Having previously done his research and found the lowest rate, Max had set a personal target. The lowest bid he received on his Loan Dolphin account was with Resimac and he decided to proceed – but this time, he had an experienced broker on his side. Halfway through the process, Max realised that to finance the new car he was planning on buying, it wouldn’t be a bad idea to have a bit of extra cash up his sleeve. He ran the idea past his broker, who managed to arrange a higher premium on the same day.
“Ultimately I ended up refinancing the whole thing and I got exactly the amount of money that I wanted, at the interest rate that I wanted and with the customer service that I wanted. I was really pleased with the Loan Dolphin experience in general.”
With the home loan settled and 2018 in full swing, Max is well on his way to paying his loan off early. He’s calculated that he will save $80,000 over the term of the loan, but has committed to making higher repayments to ensure that he can pay the loan off quickly.
“The major benefit for me is that it gives me peace of mind. I’m feeling more calm because even if the interest goes up at some point – hopefully it won’t! – but if it does, I know I’ve got this buffer that I’m using for repayments. I feel safer knowing that I can afford a few increases.”