Where do you stand?
When was the last time you reviewed your home loan?
If you are like the majority of mortgagees, it’s probably not something that’s on your to-do list or in your diary as a recurring activity.
By not regularly reviewing your home loan it’s highly likely that your end result will also be like the majority- you’ll be serving a 30-year home loan term and paying close to what you borrowed in interest to your lender.
You also run the risk that it no longer works for your budget and lifestyle.
Take for example the situation we are in now, interest rates have been rising and many mortgagees are feeling the pressure on the household budget.
You may have come off a fixed-rate loan and your lender now has you on a rate that’s a lot higher than the rate you enjoyed for say 2 years.
The majority complain about it, and find a way to make their monthly payment but do not seek to find a better way.
So, what are the signs that you need to review your home loan?
Whilst we recommend reviewing your home loan every 12 months, at a minimum look out for the following signs that now is the time.
1. Your circumstances have changed.
You now have other debt, you received a lump sum of money, you want to do some renovations to the home, you’re thinking of selling your home (such as upsizing or downsizing), or your financial situation has changed (new job, maternity leave, etc)
2. Your property value has increased, or your home loan has decreased.
If your loan-to-value ratio is now below 80%, your current lender is unlikely to reward you for this with a lower interest rate, but other lender are likely to.
3. Your fixed rate is about to expire.
Your new variable rate (called the revert rate) is likely to be much higher than your old, fixed-rate resulting in a massive increase in your monthly repayment.
4. You’re no longer happy with your current lender
You’re no longer getting the service you once did and you’re not feeling the love. With over 40 lenders and more than 1000 products in the Australian marketplace, there’s a good chance that another lender will embrace you with open arms.
5. You’re under financial stress.
With rising interest rates it’s not uncommon for people to feel financial pressure. Sometimes even a small saving can make the world of difference.
We recently reviewed a new client’s situation who was paying 6.5% interest and we were able to refinance their loan to a lender offering 5.24%. The difference was $781.65 per month! AND they got a $4,000 cash back!!
Reviews are something we consider to be very important, and we take them seriously (and suggest you should too).
If you would like any assistance with reviewing your home loan, please reach out.
Have a great week!
