If you’re looking to save, then reviewing your mortgage can be the best place to start. As reducing your interest rate can possibly save you thousands per year.
Historically low interest rates make it the perfect time to review your mortgage as many lenders have failed to pass on all of the rate cuts that the Reserve Bank have made. This means that you may be able to find a better mortgage deal and possibly save yourself paying more in interest.
But, before you jump in the home loan deep-end you need to do your homework. Researching current mortgage rates and comparing these to your existing mortgage rate, enables you to find out exactly what you already have and then to ascertain if you can improve on this.
How to Review Your Mortgage
Reviewing your mortgage means looking at your current home loan in detail. Many of us have a ‘set and forget’ mindset when it comes to our mortgage where we took it out years ago and we’ve never looked at it since. However, many financial experts recommend that you review your mortgage at least once every 12 to 24-months.
To effectively review your mortgage carry out the following steps:
1. Find out what your current interest rate is – If your interest rate is variable then it’s highly likely that it’s changed since you first took out your mortgage. So it’s time to find out what rate you currently have.
2. List your home loan features – Some home loans come with extra features such as a redraw facility or an offset account. These additional features tend to make your rate of interest higher, so you need to work out if you use these features enough to warrant the extra interest or if you can live without them and can go with a no frills home loan, which will be cheaper.
3. Look at market mortgage rates – Once you know how much your current interest rate is and what features you have and want, then it’s time to look at other mortgages on the market. Next compare these to what you already have.
What to Do with the Information You’ve Collected
Once you’ve collected your information, print it out. Compare it to your current rate and if it looks like you can get a better deal then make an appointment to see your existing lender. At your appointment present the facts you’ve collected and ask your lender for a better home loan deal.
If your lender offers you a better rate, then you’ll need to ask about any fees and charges, terms and conditions, and then calculate whether or not you’ll be better off. Most financial experts suggest that in order for refinancing to save you money long-term, then you need to accept an interest rate that is one percent or more less than your current rate. For instance, if your current home loan in 5.49 percent then you need a new rate of 4.49 percent or less for you to make any financial savings.
Do you want to save more on your mortgage? If so, then contact eChoice and find the right home loan for YOU today.
Written by eChoice