Reviewing your home loan can feel like an uncomfortable task that is easy to put on the backburner, but it can save you a significant amount of money in the long run. With interest rates constantly changing and financial situations evolving, a home loan review might be just what you need to ensure you’re getting the best deal possible.
In this latest blog update from our Sunshine Coast mortgage brokers, we will be exploring:
- Why now is a good time to review your home loan
- Signs that you should review your home loan
- The benefits of regularly reviewing your home loan
- FAQs about home loans
Why Now Might Be a Good Time for a Home Loan Review
Interest Rates Are Changing In Australia
Interest rates fluctuate over time, influenced by economic conditions and policy changes. Over the last 1-2 years, there have been significant shifts in interest rates in Australia, making it an ideal time to review your home loan. According to Aussie Home Loans,
“Keeping an eye on interest rates and fixing your home loan when rates are low could save you thousands in interest over the life of your loan” Aussie Home Loans.
Even a slight reduction in your interest rate can lead to substantial savings over the term of your loan.
What To Do When Your Financial Situation Has Changed?
Life events like getting a new job, a raise, or even financial setbacks can impact your ability to manage your mortgage.
If your income has increased, you might benefit from increasing your loan repayments, thereby paying off your mortgage sooner and saving on interest.
On the other hand, if you’re facing financial difficulties, a review could help you find a more manageable repayment plan.
5 Signs That It’s Time to Review Your Home Loan
When is it a good time to review your home loan? Let’s look at some signs that it would be beneficial for you to review your home loan.
It’s Been a While Since Your Last Review
If it’s been more than a year since you last reviewed your home loan, it’s time to take another look. Banks regularly update their products and rates, and a loan that was competitive a few years ago might not be the best option today.
UniBank suggests, “Review your loan every 12 months to ensure it still meets your needs and is competitive” UniBank.
Your Fixed Rate Term Is Ending
If you have a fixed-rate loan, the end of the fixed term is a critical time to review your loan. When your fixed rate period ends, your loan will typically revert to a higher variable rate. This transition offers a perfect opportunity to negotiate a better deal or switch to a loan that better suits your current needs.
You’ve Accumulated Substantial Equity
As you pay down your mortgage and property values increase, the equity in your home grows. With significant equity, you might qualify for lower interest rates or better loan terms. Leveraging this equity could also provide opportunities for investment or home improvements.
Your Loan Features Are No Longer Suitable
Over time, your needs and preferences may change. It could be that you now value offset accounts, redraw facilities, or flexible repayment options more than you did when you first took out your loan.
Bankwest advises, “A home loan health check can ensure that your loan’s features align with your current financial situation and lifestyle” Bankwest.
You’ve Noticed Better Deals Elsewhere
If you’ve come across offers from other lenders that seem more attractive than your current loan, it’s definitely time for a review. The competitive nature of the mortgage market means that lenders often offer enticing deals to attract new customers. Use these offers as leverage to negotiate better terms with your current lender or consider switching to a new one.
The Benefits of a Home Loan Review
Do any of these signs sound familiar to you? If so, you may be wondering what the benefits are of going through a home loan review. Let’s explore some of the best benefits:
Lower Interest Rates and Reduced Payments
One of the best benefits of a home loan review is the potential to secure a lower interest rate. This reduction can lead to significant savings on your monthly repayments and overall interest paid over the life of the loan.
Better Loan Features
A review can also help you access better loan features that align with your current financial goals. Features like offset accounts, additional repayment options, and redraw facilities can provide greater flexibility and savings.
Debt Consolidation Opportunities
If you have other high-interest debts, consolidating them into your mortgage could reduce your overall interest expenses. This strategy simplifies your finances and often results in lower monthly payments.
FAQs about Home Loan Reviews
Should you review your home loan every year? How much does it cost to switch home loans? Here are some answers to frequently asked questions about home loans.
How often should I review my home loan?
It’s recommended to review your home loan at least once a year or whenever there are significant changes in your financial situation or market conditions.
Can I negotiate my interest rate with my current lender?
Yes, you can negotiate with your current lender. Presenting them with competitive offers from other lenders can be a useful tactic to secure a better rate. However, consulting with a professional mortgage broker like our team at Orchard Mortgages is always advised.
What costs are involved in switching home loans?
Switching home loans may involve fees such as exit fees, application fees, and valuation fees. However, the long-term savings from a lower interest rate often outweigh these initial costs.
What information do I need for a home loan review?
You’ll need details about your current loan, including the interest rate, loan balance, and repayment terms. Having recent pay slips, bank statements, and a property valuation can also be helpful.
Can I switch from a fixed-rate to a variable-rate loan?
Yes, you can switch from a fixed-rate to a variable-rate loan, but be aware of any break fees associated with ending a fixed-rate term early.
Taking the Next Steps
Conducting a home loan review can seem overwhelming, but the potential benefits make it worth the effort. Start by gathering information about your current loan and comparing it with available offers. Consulting with a mortgage broker can also provide valuable insights and assistance in finding the best deal.
At Orchard Mortgages, we’re here to help you navigate the process. Our team of experts can assist you in reviewing your home loan, exploring your options, and securing the right terms for your financial situation. Contact us today to get started on your home loan review and take the first step towards better financial health
Licensing statements: Credit Representatives 364849 and 490257 are authorised under Australian Credit Licence 389328 General disclaimer: This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply