Let's be honest life gets busy and it can be hard to focus on something we find to hard.
The reality is once a home loan is over 2 years old, there is a good chance you are wasting money by not reviewing your options and seeing if you can save on interest rates and/ or lender fees.
If your current interest rate is over 2 %pa it might be time to give your home loan a review.
These are our top tips when starting the process.
Tip 1 Make sure you are not paying for loan features you won’t use Take the time to work out what loan features are important to you now and over the next few years.
Tip 2 Know the fees/ penalties that will apply for ending your current loan Your current loan may have discharge fees, and have penalties for ending the loan early, especially if you have a fixed rate loan.
Tip 3 Ask what the revert interest rate is for the new loan A revert rate is the interest rate your loan will revert to at the end of a “special” offer, fixed rate period, or interest only period.
If you do the numbers you may find that with a lender “special“, any potential savings over the first 12 months may end up costing you a lot more over the life of the loan once the revert rate kicks in.
Tip 4 Understand the fees that will apply to the new loan Your new loan may have initial fees such as application and valuation costs. There may also be ongoing fees that may be monthly and/ or annual.
Tip 5 Know the fees that will apply for ending your current loan It is very likely your current loan will have a discharge fee. There may also be other penalties for ending a loan early in particular if you have a fixed rate loan.
Tip 6 Do the numbers or have someone do the numbers for you To get a good refinance outcome, it is not just about the interest rate. Take the time to compare all the fees for leaving your current lender/ loan, and the new fees that will apply and the interest charges.
Tip 7 Check your required loan amount is realistic before submitting a loan. Before you submit an application to a lender try and establish if the lending limit you need is achievable in today’s lending environment. Sometimes your financial situation may have changed considerably from when you first took out the loan.
Tip 8 Get help from a professional A mortgage broker may be able to suggest an alternative loan structure that could serve you better and has access to a variety of lender and their lending policy.