Refinancing has become a commonly used term in the Australian finance industry, but the benefits it offers are second to none ! Today I'm going to give you an insight into how one of my clients' has benefited from Refinancing.

When I first sat down with Tom and Emma at the start of 2006 they had your standard home loan at 7.5%, car loan at 10.9%, store card at 17% and credit cards at 12%. They were finding their cash flow very tight and difficult due to their numerous commitments, and they were in the unfortunate position of having to live from pay to pay. Their financial stress was a heavy, unwanted weight on their shoulders and they wanted it removed.

Their monthly debt repayments were $1,850 per month for everything, which was well over 50% of their income. We carefully went through their budgets very meticulously and realized that they were literally spending $649 more than what they were earning.

This deficit (shortfall) was forcing them to rely on their credit cards each and every month to get by, and as a result of this they became maxed out as the financial pressure continued to build. They knew they were drowning in debt and something needed to be done about it.

After sitting down with Tom and Emma and discussing their various options, they decided that rolling all of their debts into the one loan would be more manageable and beneficial.

Luckily, they had enough equity in their home to enable this to happen. When they bought the property 3 years ago they were fortunate enough to have a substantial deposit and they have also benefited from some capital growth in the area. All this available equity was just sitting in their house, being wasted.

They felt that they should be able to utilize the equity in their house for their benefit. By putting all of their 'eggs into one basket' they would end up having a much lower monthly repayment and they'd only have the responsibility of servicing one repayment.

We were able to consolidate all of their debts onto the one loan, which gave them the one, simple low repayment of $1,107 per month.

This gave them a saving of $743 per month in repayments, which resulted in a complete turnaround from spending $649 more than what they earned to being left with a surplus of $94 per month!

We were able to achieve this result by changing their financial structure onto a more efficient and effective way of banking. We went through their budgets and were able to implement a foolproof way of helping them manage their money.

We also got their incomes to start working for them, rather than having their incomes working for the banks. By having their incomes working for them, we were able to get them out of debt in 17 years rather than 29 years!

This meant that they are going to be saving $83,977 in interest because they are debt free 12 years quicker!

P.S. Just for the record, they started in 2006 with a debt level of $191,923 and at the start of 2007 they had reduced their debt down to $178,677. They have knocked $13,246 off their debt in the last 12 months - these results certainly aren't achievable when your mortgage is on a standard 25 or 30 year P & I home loan from one of the banks!

They are now looking at purchasing their first investment property in Richmond.

If you would like to be shown how a Refinance can Reduce your monthly payments and get you Debt Free quicker, simply send me an email asking for a No Obligation FREE Quote Now!