In 2025 there will be allot of change, so I wanted to outline to you what you should expect and how you can plan and prepare if not take advantage of these changes. Everything from reviewing and refinancing your home loan to getting an investment property due to increased borrowing capacity. There will be many opportunities to take advantage of so lets dive in.

Refinancing your home loan

Most people are aware of the option of refinancing your home loan to get a better rate however how many review their home loan term? What I mean by this is e.g lets say your home loan term is 28 years and you are about to refinance to a better rate, you might be saving 2k per year which sounds like allot, however if during your home loan refinance process you reduce your home loan term by 2 years, you could be savings 10’s of thousands of dollars.

Home Loan Length

Home loan repayments

Your home loan term is important because it directly impacts the amount of interest you’ll pay over the life of the loan, as well as your monthly repayments. A shorter loan term, such as 15 years typically means higher monthly repayments but significantly less interest paid overall, helping you pay off your mortgage faster. On the other hand a longer term like 30 years, results in lower monthly payments making your home loan more affordable in the short term, but you will pay significantly more interest over the loan term. Choosing the right loan term depends on your financial goals, budget and long term plans.

In this example below from an actual review we did for an existing client, we showed the difference between reducing the home loan term from 28 down to 27 and 26 years. As you can see highlighted in yellow the client is saving over 58k and 104k respectively. Now of course we had to make some assumptions such as the interest rate however no matter which way you look at it, you will save way more money cutting the length of your home loan than you will with a rate reduction.

Interest Rates

As long as you are in the ball park of what the lenders are offering as an interest rate, your rate should be secondary to the reduction of your home loan. The banks will never tell you this, because they want you to pay the minimum monthly payment for 30 years. This lack of public awareness/education or implementation is making them billions of dollars per year and affecting your retirement nest egg significantly.

For borrowers, higher interest rates increase loan repayments on variable home loans, while lower rates reduce costs, making it easier to purchase homes or invest in businesses when you are in a low rate environment. Conversely, savers or people holding significant cash reserves, benefit from higher interest rates as they earn more on their deposits. Understanding interest rates is key to making informed financial decisions. Use your own home loan figures on our home loan calculator and see how the loan length affects your repayments and whether this suits your personal circumstances.

Consolidating Debts

During this process of refinancing your home loan, you should be looking at all other debts within your household to see how you can reduce your monthly interest bill and increase your monthly cashflow. Lets be honest, refinancing is not a fun process, it is time consuming and of course we always recommend that you work with a mortgage broker who is very comfortable with this process to make this process less painful and streamlined.

Check us out on OurTop10 where you can read our client reviews. If you would like to have a further discussion on how we can assist you to reduce your annual interest costs reach out to us at startnow@sorenfinancial.com