The home loan market is continually changing with hundreds of new products and deals released to market every year. Home owners can potentially save thousands of dollars a year by conducting an annual review of their existing mortgage set up.
Many home owners put off conducting a mortgage review because they simply do not have the time to search for information across multiple lenders. Others are overwhelmed by the banking terminology and the amount of features and options available. Fortunately, mortgage brokers have this information at their fingertips and can conduct a review on your behalf for free. What’s more, mortgage brokers can often advise on hidden features within your current loan set up and help you access more finance.
How does it work?
An annual home loan review can take as little as 20 minutes. You simply need to provide your latest home loan statement showing your balance and repayment schedule and the address of your property (this helps with an indicative valuation). Your mortgage broker will assess whether you may be able to obtain a lower interest rate or lower fee account, your current loan to value ratio (LVR) and whether you have access to other loan features such as an offset account or redraw facility. They can also help with strategies to achieve your long term financial goals, advising on how to pay off the loan sooner or access equity in your property
What to look for?
After discussing your financial goals and assessing your current financial situation, your mortgage broker will evaluate a list of criteria, usually including:
· Interest rate. How does your current rate compare with what is available in the market?
· Fees. Many borrowers are so concerned with the interest rate that they forget to look at the fees they are paying on their home loan and associated accounts.
· Loan structure. The loan structure includes factors such as fixed/variable rate, offset accounts, interest only structure and line of credit versus principal and interest loans. Any home loan should be structured with the end goal of helping the borrowers achieve their long-term financial goals, so your mortgage broker will review your current facilities and make sure they are in line. They may even suggest a more complex loan structure (eg. half fixed, half variable) depending on your lifestyle, goals and market conditions.
· Package inclusions. Many lenders offer home loan packages which include other facilities at a reduced price, eg. free credit cards or bonus interest on savings.
· Refinance deals. Some lenders offer cash back deals, with up to $2,500 cash back as a refinancing bonus. Your mortgage broker is up to date on deals across multiple lenders so can advise on current and upcoming specials at the time of your appointment.
An annual home loan review does not always mean that you will need to refinance to another institution. In many cases, your broker is able to simply contact your existing lender and negotiate a better rate. Generally, the longer you stay with a lender the less discount you will be getting, so it’s always a good idea to check even if you are not considering refinancing.
If you are due for your annual home loan review, contact us at Track Financial and we’ll help find the best deal for you.