How You Can Save by Refinancing Your Home Loan
How You Can Save by Refinancing Your Home Loan
In this home loan case study, assumed a home loan with an initial loan amount of RM270, 000 and calculated using a 6% interest over a period of 360 months. The total money that is paid to settle the home loan amount plus interest is equivalence to a whopping total of RM568, 000 whereby the interest paid is RM298, 000 on top of the RM270, 000 loan amount.
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Home Loan Refinancing Case Study
There are two methods that you could save by refinancing your home loan. Both methods are able to help you save a lot on the interests paid for the home loan. Beside that, another purpose of refinancing can be used to reduce your personal loan or credit card.
First Method: By reducing monthly installment.
Example 1: Initial Loan Amount RM270K, Term = 30 years, Monthly Installment =RM1,618
Using the case study home loan package, after paying the installments for 5 years, the outstanding loan amount is estimated to be RM250,000.00 and estimated interest remaining of RM224, 737.60 based on the monthly installment of RM1,618.00
By refinancing the home loan, assuming the new interest rate is whole tenure 3.55% , the monthly installment has been reduced to RM1,258.00 per month for the remaining 25 years. With the new interest rate, now the total interest that is needed to pay for the home loan is reduced to RM120, 364.27. Do you notice the total interest amount?
That is a total savings of RM100,374.33 by just refinancing your home loan and monthly installment save RM360
Second Method: By maintaining the monthly installment.
Example 2: Initial Loan Amount RM270K, Term = 30 years, Monthly Installment =RM1,618
Using the same case study home loan package, after paying the installments for 5 years, the outstanding loan amount is estimated to be RM250,000.00 and estimated interest remaining of RM224,737.60 based on the monthly installment of RM1618.00.
This method of refinancing is by maintaining the same monthly installment of RM1618.00, while refinancing the home loan using the new interest rate whole tenure 3.55%.With this new rate, you will not only save more on interest paid, the loan term has also been reduced to a total 208 month remaining. Not only that your home loan is settled earlier, with the shorter loan term, the interest amount that is paid for the remaining home loan is RM83,780.06. That is a huge total savings of RM140,957.54.
YES! That is a total saving of RM140,957.54 by refinancing your home loan and you are able to shorten the tenure up to 89 months.
Third Method: Refinance and Maximize Your Cash Withdrawal.
Example 3: Initial Loan Amount RM270K, Term = 30 years, Monthly Installment =RM1,618
By refinancing the home loan, assuming the new interest rate is whole tenure 3.55% compare to any personal loan or credit card may charge you 9% to 18% per annual you already save 9% – 3.55% = 5,45% per annual. Let assume you got an outstanding loan of personal loan RM110K. With the new interest rate, 1st year you already can save 5.45% x 110K = RM5995 and you only need to extra RM193 per month.
