If you’ve been comfortable in your home loan for a while now (at least two or so years) you shouldn’t rest on your laurels. The mortgage market is always changing. Since you took out your home loan, the market has hit record lows (as of July 2016.) So here are five crucial questions you should ask yourself about your current home loan.
- Am I on the best possible interest rate?
If you took out a fixed interest rate home loan a few years ago, you should consider locking in a new rate or switching to variable interest rates. Interest rates are at the lowest they’ve ever been. It makes sense to look for loans with better comparison rates – so you know how much you’ll be paying overall in fees and charges.
- Am I on a good repayment schedule?
Your repayment schedule may influence how long you’ll be paying off your loan for – and how much you’ll owe in interest. If you pay by the month, consider switching to fortnightly repayments. This means you pay 26 times a year instead of 12, which is better for your hip pocket. Use a home loan calculator to see how much this could save you.
- Does my home loan offer offset accounts?
Many home loans come with offset accounts that help reduce the amount of interest payable on your loan by using your savings. The interest intended for savings offsets that amount in home loan interest. This can save you thousands in interest over the life of your loan. If your loan doesn’t have this, it’s worth thinking about adding it.
- Does my lender charge me for refinancing elsewhere?
If your lender isn’t coming to the table around offsets, lower interest rates or payment schedules, you should check if your lender doesn’t charge you for refinancing your home loan. If they do, look for a lender that may absorb the costs with better savings.
- Can I use my home loan to consolidate my debts?
If you have many debts – such as credit cards, personal loans or other sources of credit – you should ask if you can rollover your debts into your home loan or as part of a refinancing package. Paying off debt as part of a relatively low interest mortgage can save you tens of thousands of dollars compared to just depositing minimum payments each month.