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How to save $5,412 by next Christmas (and every year after that)

Wondering how you can start the year on the right foot financially? The answer is simple, refinance to a better rate.

Our data shows mid-December to mid-January is a peak time for Australian households refinancing to recoup the cost of Christmas and improve their position for the new year.

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“End of year spending combined with positive new year’s resolutions, drives a significant increase in the number of homeowners proactively consolidating debt and securing better interest rates to improve their position for the coming year,” says David Hyman, Lendi co-founder and managing director.

Based on an average Australian home loan of $371,100, households could save up to $162,458 over a 30-year loan by negotiating or switching lenders to get the best rate available*. That equates to $5,412 a year in repayments.

David Hyman shares his top financial tips:

1. Shop around

Always get the best deal by comparing lenders. Use an online home loan platform that has all the major banks and other lenders in one place.

2. Compare rates charged for interest only (IO) and principal and interest (P&I) loans

Since June 2017, P&I rates have been considerably lower than IO rates across the board. If you can afford to switch to a P&I loan, you’ll be paying less in interest and more towards being debt-free sooner.

3. Purge expensive debt

Consolidate your higher interest debts like credit cards, car loans and personal loans into your home loan. This can help reduce your overall repayments.

4. Reduce your interest

By keeping cash, such as your salary, in an offset rather than savings account you can automatically reduce the total amount you are paying interest on each month. It can save you thousands over the life of the loan.

5. Split your risk

If you are concerned about future rate rises, consider locking in part of your home loan with a fixed rate and having the remainder on a variable rate.

6. Plan for the future

Before you agree to refinance, consider your ability to make repayments should rates increase by 2 to 3 per cent. Look at your budget and ask yourself whether you will still be able to live within your means.

“By negotiating a better interest rate and home loan package, homeowners could save themselves up to $5,500 by next Christmas,” says Hyman. “That’s a pretty good incentive to do some research and assess your options.”

How much can you save with an offset account?

Find out how much you could save each month.

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  • Calculation based on rates from 37 Australian banks and non-bank lenders including the Big Four (as at 28 November 2017). The difference between the most expensive interest rate (5.67%) and cheapest interest rate (3.64%) for the average home loan was then aggregated over the life of a 30-year P&I loan. Average home loan size according to ABS, September 2017

Got a home loan question? Ask our experts in the comments below or start a live chat now.

Tags: refinance, saving, debt consolidation, low interest, david hyman

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Important legal stuff

COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
Lendi is the trading name of Lendi Pty Ltd, a related body corporate of your licensed credit assistance provider, Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence Number 442372). We will never sell your email address to any third party or send you nasty spam, promise.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of major and non-bank lenders including Click Loans which is a wholly owned subsidiary of Auscred Pty Ltd and a related body corporate of Auscred Services, your credit assistance provider. Although Lendi compares over 1600 products from over 30 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
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