Refinancing yields lower rate, lower repayments

By Nila Sweeney

Sydneysider Mandy Bean has been the sole provider for her twin daughters Danni and Lisa, now 20 years old, for the last 12 years after losing her husband.

Having only herself to rely upon, Mandy says she is careful with the decisions she makes for her family of three. So when the fixed rate portion of her home loan finished in December last year, Mandy decided to reassess her mortgage and look for a lower interest rate with the help of her mortgage broker, Jim Ellis, a personal mortgage advisor at Smartline.

Jim was able to match Mandy's needs for a home loan with several different options from different lenders. One of these options was the Westpac Fixed
Options Home Loan (Low Doc), with a low rate of 4.99%.
This meant that Mandy could not only secure an ultra-low rate, but she could also stay with her existing lender.
She says the low fixed rate suited her financial needs and allowed her to plan her finances diligently each month.
"I knew I wanted to have a fixed repayment amount each month so I could prepare more realistic budgets and have an accurate cash flow situation with my business," she says.

"Although it's still very possible variable rates would drop even more, I decided to hedge my bets that over a three-year period I would still be ahead," says Mandy.

Mandy's broker, Jim, says Westpac did not charge Mandy any exit fees to switch home loans as she was refinancing with the same lender, making the benefits of her refinancing even greater.

"The only fee Mandy was charged was the $422 rate lock fee to secure the low 4.99% fixed rate while her application was being processed. It's lucky that she did because the deal from Westpac was only on for one week and the fixed rate changed before she settled on the refinance. It was a matter of taking the window of opportunity while it was there," explains Jim.

Overall, Mandy says the costs to refinance were far outweighed by the reduction in monthly repayments.
She now saves about $497 a month in repayments, amounting to around $5,964 per annum.