Refinancing calculator: What is it, how to use and why must you use
The interest rates for a home loan have reduced drastically since the novel coronavirus disease. The decreased rate of interest can reduce your loan burden and EMIs. It is an excellent opportunity to look for a home and buy one. If you have purchased a home and opted for a home loan, you can benefit by buying another home or consider transferring the loan to another bank. It entirely depends upon your personal choice. In such cases, finding a refinancing calculator online is valuable and beneficial. To know more about it, read this article.
What are these calculators, and how does it help?
Transferring your home loan is a big decision. It would be best to consider factors like processing fees before opting for one. These calculators are online tools that help assess if a home loan transfer to another lender is suitable. You can add different numbers on the online calculator and determine the best option. If the calculated figures don’t meet your expectations, you can continue the home loan with your present lender.
How to use refinancing calculators?
It is easy to utilise home loan refinancing calculators. You can get it free on the websites of various lenders and leading banks. To use them, you must add specific details like the current interest rate, your existing loan current outstanding, and your remaining tenure. After entering the information, you can compare your existing loan’s cash flow and the revised one. As a result, it will give you a clear picture of how much you can save when you opt for refinancing the home loan.
Why must you use these calculators?
Home loan refinancing calculators have several benefits besides helping you lower the interest rate. After reading the points, you will want to use this calculator and consider your options.
- It gives you a gist of an additional loan opportunity: According to a website, 71.5 per cent of investors hold one property, whereas 18 percent of investors hold two properties. If you want to join the 18 per cent investors, you can use the refinancing option. But what if you are concerned about the interest rates and the EMIs? You can look for websites with a refinancing calculator and get a gist of the loan amount. In addition, you can look for opportunities where additional funds are required for expansion and registration purposes. You must only consider top-up loans if you can acquire the advantage of getting low-interest rates.
- It helps you calculate loans with interest rates to know the tax returns: Acquiring a home loan or refinancing means you are entitled to exemptions and different uses. For instance, as an investor, you can claim interest on the taxes after completing the tax return, but it is only liable if you earn certain income like rent, according to ATO (Australian Tax Office). In addition, the interest component of your property is tax-deductible. The interest component can be calculated yearly if you pay the loan’s interest and principal. So, you can calculate loans with interest rates, understand the tax benefits and get to know the tax returns.
- It helps display your new loan tenure: When it comes to EMI, it depends upon the loan tenure. For instance, if you calculate a loan amount of 2,000,000 Australian dollars with a current rate of 6.8 per cent and a loan tenure of 25 years, you can save 2433 dollars. For a loan tenure of 20 years, you can save 2299 dollars. Also, if you increase your tenure, you will have to pay less EMI and a higher interest rate. With the help of the calculator, you can calculate ways to reduce the tenure and be debt free.
You can check for various financing options online and verify the best one. You can consult a specialist and gain details about refinancing.