Mortgage consolidation / restructure for better savings and to tackle higher interest rates - Nfinity Financials

Mortgage consolidation / restructure for better savings and to tackle higher interest rates

By: Nfinity Financials0 comments

There is a rapid rise in interest rates in Australia, and the RBA has increased interest rates by 0.5 percent again.

The increase in interest rates will have a direct impact on the mortgage payment.

Paying off multiple debts can be a stressful and difficult task to manage, but if done properly, it can save you money in the long run. If you’re struggling to keep up with your current debt repayments, Here are a few tips to help you lower your mortgage payment, stay on budget and have better savings.

Strategy #1 Consolidate Mortgage

Mortgage consolidation is the process of merging multiple loans into a single loan. This can be a good option for people who want to save money or have lower monthly payments

Mortgage consolidation allows you to manage your finances by combining two mortgages into one loan with a single interest rate and repayment term. This can simplify your finances and make repayments more manageable. Mortgage consolidation can also save you money by allowing you to take advantage of:

– A lower interest rate

– One consolidated monthly payment

– Repayment Length on Your Terms

Benefits of Debt Consolidation

  1. Simplify

Making only one repayment each month is a lot easier than trying to keep up with multiple payments to different creditors. When you consolidate your debts, you only have to make one payment to one provider. This can help you stay on top of your finances and avoid missing any payments.

  • Reduce Stress
    If you choose to consolidate your two mortgages into one, your other creditors will no longer have a part in your life. This means no more stressful phone calls to deal with and makes managing your finances much easier.
  • Save Money

Consolidating your mortgages can save you a lot of money each year. When you consolidate, all of your mortgage rates are combined into one fixed rate. This new loan is tailored to better suit you, and as a result, you can save tons of money!

So if you’re looking to save some money each year, consolidating your mortgages is a great option worth considering!

  • Improved Credit Score
    Mortgage debt consolidation can also protect your credit rating. The more repayments you have, the harder it becomes to keep up with them. A bad credit rating makes it hard to get a loan and high-interest rates. Mortgage consolidation makes repayments easier and you may improve your credit score as a result.

It has never been so easy to consolidate mortgages! Get in touch with Nfinity Financials, The Best Mortgage Broker in Sydney to find out how we can help you.

Strategy #2 – Refinancing

The refinancing of a mortgage occurs when the homeowner gets a new loan to replace their current one. The new loan should help the homeowner save money or accomplish another financial goal. Refinance could save you thousands of dollars on your home loan. So, if you’re thinking about saving those extra dollars, check out the benefits below.

  • Save Money: Through Refinancing, you could be entitled to significant savings by securing a cheaper interest rate and lowering your monthly repayments.
  • Get your loan paid off sooner: If you’re not struggling to make your current mortgage repayments, refinancing your loan could give you the opportunity to reduce the number of years you have to pay it off. Although this means you would have higher loan repayments in the short term, in the long run, you would save money by paying off your home loan sooner.
  • Get access to your equity: Refinancing could help you buy an investment property. You may not even need a deposit. That’s because many lenders will let you use the equity you have in your home as security against another property.
  • You can get funding for extensions or renovations: Construction loans, personal loans, and credit cards all have their disadvantages when compared to taking out a home loan and refinancing.

Home loans offer low-interest rates and flexibility that other financing options cannot compete with, making them the best option for those looking to save money on their renovation.

  • Finances can be improved: Refinancing your home loan could help improve your overall financial situation, particularly if you currently have several different debts. By refinancing, you could roll all of these debts into one loan that is secured against your home. This should give you the chance to access lower interest rates and means you’ll only have to make one repayment each month.

Strategy #3 – Use Loan Product Features – Offset & Redraw Accounts

Offset accounts are transaction accounts that give you access to your money. They are similar to everyday transaction accounts, but with some added benefits.

Offset accounts can help you save on interest, reduce your tax payable, and more.

Redraw facilities allow you to access additional repayments that you have made on your home loan. Both can help reduce the amount of interest you pay on your home loan.

What is Offset Account:

An offset account is a type of transaction account that is connected to a home loan. The way it works is that it is like a high-interest savings account, but the balance of an offset account is subtracted from the remaining principal before interest calculation.

This can save you money on interest without having to physically pay the funds into the loan, giving you the freedom to keep your funds in the account and save on interest while still keeping the loan itself separate from any personal transactions.

Offset Account Benefits:

  1. Works Like Saving Account: An offset account is just like any other savings account in the sense that the money deposited in this type of account is still accessible to you. However, one of the benefits of an offset account is that the fees you must pay for account-keeping and transactions are usually lower than they would be with a regular savings account.
  2. Reduces Interest Cost: Your offset account is connected to your mortgage, and the money in that account can be used to help pay off your loan. The funds in your offset account are accounted for each day and applied to your mortgage balance. Having more money in your offset account can reduce the amount you need to pay on your mortgage.
  3. Tax Deduction Advantage: It is generally advised by financial advisers to use offset accounts for tax deductions on interest.

What is Redraw Account :

With a mortgage redraw facility or a redraw account, you can make additional payments to your home loan—and withdraw those funds at a later date if you wish. Typically, these payments are made in addition to the required minimum repayments or in the form of one-off lump sum payments.

Redraw Account Benefits:

  1. Offset Account Benefits: Reducing your loan balance means paying less interest. The more you withdraw, the more it affects your interest rate, since the extra funds are added to your loan.
  2. Flexibility to Access Funds : In case of an emergency or unforeseen expense, you will have the ability to withdraw funds from your redraw account.

Strategy #4 – Reviewing Ongoing Expenses

According to a recent survey released by Consumer Group Choice found that more than 1,000 households, nine out of ten Australians say their budget has come under increased pressure in the past year due to the continuing cost of living crisis.

The research found that 90% of households surveyed said their bills have gone up in the past year.

Therefore, to save money, it is helpful to keep track of your expenses on dining out, subscriptions, and impulsive purchases as well as on utility bills like phone, electricity, Internet & gas.

If you’re feeling the pinch of rising interest rates, contact our experts at Nfinity Financials. We are proud to have a 3rd ranked broker in Australia as per the ratemyagent ranking for 2022.

Our Loan Advisors are always happy to help you with any advice you may need about your loan. Give us a call now on 1300 GET LOAN or 1300-438-562 for professional and friendly service.

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