Reviewing your home loan is a housekeeping exercise that should be conducted every 3-5 years. This allows you to confirm the loan still suits your needs, is competitively priced, has the features and benefits you need and if not, find a more suitable product that saves you money – even if that means switching lenders.
Why review your home loan?
You might want to ‘set and forget’ when it comes to your mortgage – after all, with so many other things to take care of in life, who needs more life admin?!
But, taking the time to review your home loan – likely to be your biggest debt – is a worthwhile exercise that could save you thousands of dollars. Plus, you really don’t have to do the hard work yourself if you have the right broker…
1. Save money
Reviewing your home loan is one of the most cost-effective exercises you can undertake for your household budget. Most people review their insurance (be it home, car or health) every year in the face of rising premiums but you can save 10 times more by reviewing your home loan too. Therefore, make it something you do at least every 3-5 years, if not every 2. Book a review in with your broker in advance and let them do some homework for you.
2. Get the rate you deserve
Most variable rate loans are priced at settlement with a discount linked to a Standard Reference Rate. It is the discount that is guaranteed as the reference rate can change. Banks change their reference rate when the RBA changes the cash rate, but they can also change them independently. Banks can lift their reference rate to allow them to offer larger discounts to new bank clients. This allows them to offer great rates to new clients which don’t automatically go to existing ones (yes, this does seem unfair, but you can also use it to your advantage!).
Refinancing allows you to access the best discounts available at the time and keep your home loan current and competitive.
3. Confirm you still have the right product
Review your product type. Are fixed rates more competitive or less than your variable rate? Fixed rates move in different cycles to variable rates and therefore can be more cost effective at different times of the cycle.
4. Enjoy the potential for cash back
Cashbacks make refinancing a cash positive transaction and FastRefi reduces the friction involved. The average cost of a refinance is approx. $700 – $800. This includes your existing lender discharge fees, new lender fees and govt. transfer costs. Cashbacks can be as high as $6,000 depending on the lender. Furthermore, many lenders offer FastRefi, which allows for a much quicker and smoother refinancing experience. So, if the rate is cheaper and the product offers the same features and benefits why wouldn’t you switch?
5. Release equity from your property
Converting to investment or getting an equity loan/cashout for any purpose. If you want to access the equity you’ve built in your property or want to change from investment to owner occupied or vice versa, you should always have your broker review all lending options including internal and external refinancing. Don’t forget, any application for additional finance, whether it be to your existing bank or a new one requires a full financial assessment, so refinancing to a new bank won’t take any more time than staying with your new one.
Do you think you’re getting the best deal?
Reviewing your home loan is a must do activity to safeguard your financial health. Refinancing, whether it be internally with your current lender or a new lender can save you money and ensure your loan is providing you with the benefit and flexibility to meet your needs. Talk to your broker today about booking in a home loan review.
