Is it time to Review and change your home loan?
If you’ve had the same loan for over 12 months, it might be time to lreview and find out is it still the best loan to suit your needs. Needs and pricing change, so it is recommended to review annually like you do with other plans and subscriptions, like mobile plan, energy plans and insurance cover.
The best way is to get a mortgage broker to conduct a home loan Review for you. Let’s look at the benefits of this in more detail.
Save money
A home loan Review may highlight where you can save money. For example, introducing an offset account that contributes towards paying off the interest of your loan may be a good addition. Or removing an offset as you may be paying a fee and not using it or could just use a loan with flexible redraw with less fees and a lower rate.
Some ways you may be able to save money are by making weekly or fortnightly repayments instead of monthly, by changing your loan conditions, and by making extra repayments.
Use a repayments calculator or chat with your broker to work out how much you can save by paying a little extra. It may even help you pay off your mortgage sooner. Who doesn’t want to do that?
Manage your finances / consolidating debts /budgeting
Apart from savings, you may be able to manage your overall finances better and improve your household cashflow especially during tougher times.
- A weekly budget may be key in seeing where your money goes, and where it can be saved or redirected. Using some of the amazing lender spending trackers can be a great tool.
- You might want more flexible repayment options, such as the possibility of splitting your loan between fixed and variable rate.
- Possibility of extending your loan term to reduce monthly payments while possibly under financial pressure.
You may also want to consider consolidating all your debts into one loan. Although this extends the interest on short term debts it can improve your overall cashflow. This is finance 101 and a great way to be able to manage your finances in a more simple way. Please chat with your broker as consolidating high interest short term debts into your mortgage may not always be the best overall saving but may help with the cashflow in your household.
Move, renovate or invest
All of these options may provide greater flexibility, and less financial stress, making your repayments more manageable.
- Moving to a cheaper area and renting out your existing home, could save you money, while someone else pays off your mortgage.
- Renovating and selling your home could lead to a great financial windfall in the long-term. Just be careful not to overextend.
- Investing in an additional property elsewhere could redirect funds in a new and more profitable direction.
Refinancing
Refinancing may be a good option, particularly if you aren’t happy with your current lender or even if you are but they are just not the most suitable option for you right now and wont reduce your rate to match the new customer rates.
Refinancing may also include looking at what type of home loan is best for your overall needs. Some options include: fixed, variable, principle and interest, interest only, split between various options, redraw, with an offset or without an offset, land, construction, non-PAYG and equity release.
Each option has different loan features that may or may not suit you and some are cheaper and some come with extra fees or higher rates.
Sometimes a broker may want a new valuation as many lenders offer better rates to those with more equity. Your equity may have gone up and the lenders do not offer you the cheaper rate.
What does a home loan health review look like?
A mortgage broker will want to understand more about what your situation is now and what you may be wanting in the future. They will review your current financial information and also with understanding credit policy and pricing they will make some recommendations and provide some comparisons.
They will review if your loan is still competitive and take the stress of dealing with lenders out of the process for you.
There is quite a lot of paperwork involved now however most of it is done by your Broker. You will be asked to provide certain documents and then the rest will be up to the broker to work out alongside you to make it as easy and stress-free as possible.
It is advisable to get this review done at least once a year, as lenders are changing so fast and your situation may also be changing.
A simple home loan review can save you thousands of dollars a year. If you are on an unnecessarily high home loan rate, it could be costing you years of time in being able to pay off your loan. Being able to reduce your home loan debt significantly sooner than originally planned, means you can work towards saving or spending your money elsewhere, like on an investment property.
So, what are you waiting for? Contact a mortgage broker and start the home loan review process, today.