Finding the best value home loan should be pretty straightforward. Once you have found a home loan that suits your needs, it’s simply a matter of being approved; then it’s set and forget, right? Many Australians treat their home loan like a nasty secret, better left in the background away from sight, away from mind. Most Australians are doing it wrong.
Taking out a home loan is no small feat, sure it can be easy to get a good deal and sign the paperwork, but it’s costly and requires decades to pay off. A home loan is often the single biggest ongoing cost to households, but if looked after and maintained, it can be wrangled into a better deal throughout its life.
Maintain.
Just as you buy a car, a home loan doesn’t stay new forever. Lenders will compete fiercely for your business, and aren’t afraid to introduce crazy low-interest rates for a limited time, to draw you in. A great deal five years ago could be rather ordinary today. Happily, refinancing your home loan isn’t complicated, and it could save you thousands of dollars.
It pays to spend 20 minutes every couple of years to make sure you are still getting the best value home loan. Ask your self the following questions:
Is my repayment rate competitive?
This is an easy comparison, use the comparison rate of your loan and look at what other lenders are offering. A fixed-rate home loan can be a good deal for those who need fixed repayments but should be checked up on once the term expires.
What fees am I paying?
Do you know what your mortgage is costing to maintain? Lenders will charge all sorts of fees for filing paperwork and signing forms, so make sure you know what you’re paying for.
Am I happy with the service?
The home loan market is fiercely competitive, and lenders will bend over backward to get your business. Does your current lender make you feel comfortable? Are you happy with their customer service? If not, it might be time to ditch them; there is no room for lousy customer service.
What features do I need?
Perhaps at the time of signing the mortgage, you didn’t see the need for extra repayments or a withdrawal facility. A lot can change in a few years, and it pays to know what features you need and to find a home loan that provides these features.
Am I paying for features I don’t need?
Maybe your broker charmed you into a deluxe home loan with a full offset account and unlimited early repayment. If you are a super saver or able to divert more funds to your mortgage, these features are brilliant. If you are struggling to make the base repayments, these features are costly and useless. Be realistic and only pay for the features you need.
Has my situation changed?
Did you get promoted since signing the mortgage? Perhaps your partner landed that dream job, and you have a greater ability to make extra repayments. Or maybe you have extra commitments and extra costs; whatever the case may be, it’s important to take stock of your situation and adapt to suit.
Refinancing your home loan is a fairly simple process and can save you thousands of dollars and shave years if the life of your home loan. Every few years, it pays to perform a home loan health check and adjust accordingly. Your home loan shouldn’t be a stiff and bloated money sink, it should be agile and lean. Take twenty minutes today to give your home loan a clean bill of health.