Home Loan Refinancing Tips - How You Can Save by Refinancing Case Study

In this home loan case study, we’ll base on a home loan with an initial loan amount of RM270, 000 and calculated using a 7% interest over a period of 300 months. The total money that is paid to settle the home loan amount plus interest is equivalence to a whopping total of RM546, 000 whereby the interest paid is RM276, 000 on top of the RM270, 000 loan amount.

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.

First Method: By reducing monthly installment.

Using the case study home loan package, after paying the installments for 5 years, the outstanding loan amount is estimated to be RM230, 963.00 and estimated interest remaining of RM233, 412.35 based on the monthly installment of RM1662.44.
By refinancing the home loan, assuming the new interest rate is 5.25% for the first 36 month and 5.15% thereafter, the monthly installment has been reduced to RM1370.45 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 RM178, 830.68. Do you notice the total interest amount?
That is a total savings of RM54, 581.00 by just refinancing your home loan.

Second Method: By maintaining the monthly installment.

Using the same case study home loan package, after paying the installments for 5 years, the outstanding loan amount is estimated to be RM230, 963.00 and estimated interest remaining of RM233, 412.35 based on the monthly installment of RM1662.44.
This method of refinancing is by maintaining the same monthly installment of RM1662.44, while refinancing the home loan using the new interest rate, 5.75% for the first 60 months and 5.37% thereafter. With this new rate, you will not only save more on interest paid, the loan term has also been reduced to a total 212 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 RM120, 149.75. That is a huge total savings of RM113, 262.60.
YES! That is a total saving of RM113, 262.60 by refinancing your home loan.

Based on the graph, you would notice the major difference on the loan amount paid overtime.

Common Misconception on Home Loan Refinancing

1)I need to pay for the legal fees.

There are Zero Moving Cost Packages that allows you to refinance without the need to pay for the legal fees.

2)Refinancing cannot save a lot of money

An estimated loan amount of RM100, 000 can saves you of up to RM30, 000 of interest amount.

Summary of Case Study

Based on the calculations above, refinancing can really save you a lot on the total interest paid to your lender. Over the years, we have helped many customers on refinancing their home loan and the answer was always positive. Not only that refinancing saves you on interest, our WISE consultants will even advise you on which home loan packages that are the best suited for you.

If you are thinking of refinancing already, why not that you try out our Refinance Calculator out how much you could save by refinancing or you could talk to our consultants through:

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Disclaimer: The results shown in the various calculation are estimates for comparison and illustration purposes only, and are based on information that you have entered and rates published by respective lenders on websites, pamphlets, literature and advise provided by lenders to us from time to time. The simulation assumes interest rate(s) and growth rate(s), which may be subjected to variations over the term of the projection. Figures are also subject to validation of property valuation, redemption sum, and other information incidental thereto. While every care has been taken in compiling and preparing the simulation, report, summary and other contents herein, neither the company & nor its consultant(s) guarantees the accuracy, completeness and/or applicability of the information provided nor is the information meant to be final and binding.