When your needs change, so can your home loan.

PiggyBankAndMoneyConsider reviewing your mortgages once a year to make sure it still meets your requirements.  Here are some issues to consider:

Could I be paying less interest?

Although the interest rate is the single biggest cost in a loan facility, it should not be the only consideration for choosing a mortgage.  However, It does make sense to check that you are not paying more for a loan than you need to.  There is always competition between lenders to offer the lowest rate and lenders are constantly bringing out new products and offers.  So even if you had the lowest rate loan a year ago, things may have changed.

Before switching to a lower rate just make sure you take all costs into consideration, or you could end up worse off.  These include:

  • Termination or break fees, for exiting your loan early.  For fixed rate loans these fees could be high.  You may also have to pay the lender’s legal fees for discharging the mortgage over your property.
  • Fees and costs associated for the new loan: application fees, valuation fees, and legal fees.

If you are looking for a cheaper deal, here are some tips:

  • Go to your existing lender and see if they can match or better the best deal that you can find.  Alternatively see if they can offer you a better loan than you currently have with them.  This could help avoid most of the refinancing costs.
  • Ask the new lender if they will waive the fees for your business.  Most lenders have Nil Application Fee offers throughout most of the year.  Contact us as we will also be able to advice you.
  • Ask if you qualify for a Professional Package on your loan.  This is a discount on the interest rate and could amount up to 0.9% off the standard variable rate.

What’s different in my life?

Has your personal situation changed over the last year?  Maybe you’ve been promoted, had a pay rise, or gone from contract work into a permanent position.  Or you could be considering some tax minimization strategies.  Different mortgage products are tailored for different situations, so you may be better suited to a different loan.  For example, if you were previously self-employed, but are now a salaried employee, your Low Doc loan could be switched to a lower interest product.  Or with the change in tax rates, a different loan structure may need to be considered.

Do I need to unlock equity?

As you repay your mortgage in time, you could accumulate equity in your home.  Also with the rapid increases in real estate values in some areas, you may be able to tap into the value that’s built up in your home without having to sell now.  The equity from your home can be used to fund many requirements – from putting children through university to increasing assets through purchasing an investment properties or shares.  As long as you are able to service the loan repayments, you may be able to borrow up to 80 percent of the value of your home without having to pay lenders mortgage insurance.  Speak to you financial adviser to help you set up a gearing strategy to invest.

Could I pay off my mortgage faster?

Some mortgage products are designed to help motivated borrowers repay their mortgages quickly.

If you’re striving to be mortgage free, for example, there may be a more effective product than your existing loan to drive your mortgage down.  A ‘Basic’ loan usually comes at a lower interest rate, but its lack of flexibility may restrict certain mortgage reduction techniques.  Lines of credit, offset accounts, and redraw facilities all allow borrowers to pile extra funds into their mortgage on a regular basis, which may result in taking years off your repayments.

If you have recently had a change in personal circumstances, contact us about reviewing your situation.