As the calendar flips over to July, now’s a good time to give your home loan a once-over. We look at five strategies that could help you save on interest and pay off your mortgage sooner.
With three rate hikes already this year, and a big variation in rates between lenders, it’s worth checking you’re not paying too much interest on your mortgage this new financial year.
The hard part can be knowing how or what to weigh up. Here are 5 things to consider.
1. Review your loan rate
Not sure about the rate you’re paying? You’re not alone.
Over one-in-two home loan borrowers are in the dark about their mortgage rate.
Not knowing this number can be an expensive oversight.
So, grab a copy of your latest loan statement or jump onto your banking app. You’ll usually find your current rate under your account details.
As a guide to how your rate shapes up, the average variable rate now is about 6.45%.
The thing is, there are still some lenders offering home loan rates that start with a ‘5’ or a low ‘6’.
If you’re not happy with the interest rate you’re paying, call us to find out how much you could save by refinancing.
2. Check your loan has the features you need
Loans can come with a variety of features that may help you save on interest, and pay down your mortgage sooner.
However, having access to these features may mean paying a slightly higher interest rate.
If you’re not making use of them all, switching to a lower rate ‘basic’ loan could see you save.
3. Add up the fees you’re paying
While it’s natural to focus on your interest rate, it’s also worth keeping an eye on home loan fees. They can really add up over time.
Around 14% of loans still charge monthly fees, and where they apply, these fees can be as much as $15 a month.
Talk to us if you’re being slugged with a monthly fee. It’s an additional cost you may be able to avoid by moving to a different loan.
4. How does your loan shape up for flexibility?
Home loan flexibility is all about how well your mortgage can adapt to changes in your circumstances or lifestyle.
This can include being able to make extra repayments, and enjoying fee-free redraw if you need to draw the money back out for unexpected bills.
Is your loan flexible enough to be split between a variable rate (to benefit from any rate falls) and a fixed rate (for repayment certainty)?
Or, is your loan portable? This may give you the flexibility to transfer your mortgage from your old home to a new place if you move, letting you avoid the cost of setting up a new loan.
5. Is your lender still showing you love?
Great service doesn’t just mean a quick call to check that everything is going smoothly with your home loan.
It’s also about rewarding your loyalty as a home loan customer. And that doesn’t always happen.
According to Canstar, an owner-occupier who took out a loan five years ago and hasn’t renegotiated since, is likely to be paying a rate of 6.98%.
Yet many lenders are offering variable rates below or just about 6.0%.
Despite the potential for savings, more than half (52%) of Austrslian home loan borrowers have never changed lenders.
If that sounds like you, call us to see if you’re paying a home loan loyalty tax simply by sticking with the same lender.
Head into the new financial year confident about your home loan
A home loan review shouldn’t take too much time out of your schedule.
Contact us today about a home loan health check. It could help you hit the new financial year running.
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