The year’s almost over, and it’s time to set goals for 2018. One important objective for the coming year should be to review your home loan. For most people, their biggest asset is their home, and concurrently, their biggest liability is their home loan. So, it makes sense, when setting goals for the coming year, to include a review of your home loan.
It is essential to review your home loan on a regular basis to ensure that your current loan is competitive with other loan products on the market and, importantly, to ensure you are not paying too much in interest. In the current market, competition between lenders is strong, and as such, lenders are looking to attract new clients and retain their existing clients.
Your broker can conduct a review of your home loan on your behalf and make a recommendation to you whether to retain your existing loan, seek a better interest rate from your existing lender, or refinance with a new lender offering a more competitive product. In making those recommendations, your broker will review the following:
Your current financial position
Has your income and expenses position changed since you last reviewed your loan? If so, this may have an impact on whether refinancing is right for you. Have you taken out a new car loan or has your employment status changed? These issues will be considered when making recommendations to you.
Your financial goals and objectives
Your broker will discuss with you where you currently sit, financially speaking, and where you would like to go. Your broker will assist you to identify financial goals and objectives, and will provide loan recommendations that support those objectives.
Your current interest rate
Your broker will be able to determine whether your current interest rate is competitive given current market conditions. A simple rate review could potentially save you thousands. If you don’t already know the interest rate on your home loan, you can log onto online banking or review your last loan statement, where the rate will be noted.
Home Loan Shopping List
As part of identifying your goals and objectives, your broker will discuss with you various features you want in your home loan. This may have changed since you first took out the loan, so it is important to review every 2 years. These features could include:
- Variable or fixed interest rate: A variable interest rate allows you to make additional repayments to your loan without incurring break cost penalties. However, when the market rate goes up, so does the interest rate on your loan. Conversely however, when the market rate goes down, the interest rate on your loan will often follow suit. A fixed rate provides certainty that your repayments will not change during the fixed rate period. However, if you wish to make additional repayments, break costs will often apply. Another option is to split your loan between the two.
- Offset account: Are you a good saver? An offset account is a great option that rewards you by offsetting the balance of your offset account with the loan balance. Interest is then calculated on the difference, which means you pay less. The greater your savings, the lower your interest charge will be.
- Other features: Do you want to be able to redraw fund from your loan account, or is it important to you to be able to switch your loans? Perhaps your primary concern is that you only bank with a major bank. Your broker will discuss all these options with you and take them into account when providing you with recommendations.
Better deals don’t always mean better interest rates. You have to look at the overall package to determine whether or not a product is the right fit for you.
Using a Mortgage Broker
This might all sound like a lot of work, especially when there are thousands of loan products on the market. Don’t worry, we are here to ease that stress and do the leg work for you. Your broker will find the most suitable loan for you and present you with multiple options so that you have control over the final decision.
Your broker will review your current home loan to determine if any exit penalties apply and may even be able to negotiate a better deal with your current lender for you. So, if one of your goals for 2018 is to be one step closer to financial freedom and saving money, get in touch with us today. A second opinion doesn’t cost you anything, but could potentially save you thousands of dollars in the future.