Home loan health checks allow you to fine-tune your home loan and can allow you to uncover ways for you to shave years off your mortgage. A health check can also allow you to reduce your monthly costs, and to reduce the amount of interest that you pay back over the term of your home loan.
You can either conduct a home loan health check yourself, or if you’re not sure what you should be looking for, then you can enlist the help of a mortgage broker. A mortgage broker will often conduct a home loan health check for free and they’ll suggest ways you can save.
How a home loan health check is conducted
Typically aspects of your current home loan are reviewed to see if you are getting the best deal possible and to make sure you’re using any home loan features effectively. If it is discovered that improvements can be made, which can save you time and money, then a series of ‘cost saving’ suggestions may be recommended. Of course, it is entirely up to you whether you take these suggestions on board and use them.
How you can conduct your own research
When conducting your own home loan health check research you need to look critically at your home loan. This can be done by focusing on the basics and then comparing these to other home loans. Here are a few suggestions to get you started.
1. Look at your home loan repayment frequency – How often are you paying your home loan? If you’re currently paying your home loan monthly and your lender has no restrictions on how frequently you can pay, then you may want to consider changing your repayment frequency. Why? Well, if you make your home loan repayments fortnightly or weekly then you’ll make an additional monthly payment per year. This is because there are 26 fortnights in a year, which equates to 13, 4-week months.
2. Review your home loan interest – What is your current interest rate? When reviewing home loan rates always compare loans of the same type with the same features, and always look at the comparison rate. The comparison rate reflects the ‘true cost’ of the home loan over the home loan term as it typically factors in fees and charges. Of course, for refinancing to be viable you need to think long-term and the interest rate needs to be at least 1 percent lower than your current rate, otherwise the costs will outweigh any benefits.
3. Consider your use of home loan features – Do you currently have home loan features that you don’t use? To reduce your home loan costs you need to use features, such as a redraw facility or offset account effectively. By paying extra money into your redraw or offset account you can reduce your home loan principal and, in turn, reduce the amount of interest you pay. This can then allow you to pay off your home faster, for less.
Do you want to organise a HOME LOAN HEALTH CHECK? If so, then contact eChoice we can help YOU today.
Written by eChoice