Time to defrost your home loan?

Has your home loan been on ice, unchanged for as long as you can remember? With interest rates rising, some lenders are nevertheless offering some red-hot deals right now that could melt years off your mortgage, so this could be the perfect time to crack it open and see if it still matches your current lifestyle and financial circumstances.

When you first took out your home loan, it might well have suited to your needs perfectly – and maybe still does. But with increased competition between banks and other lenders, it is quite possible you could find a better, well-suited deal.

To determine whether your home loan is in need of a health check this spring, ask yourself the following simple questions:

1. Do you know your home loan’s interest rate?
Make it your business to find out what you are paying. A home loan health check could reveal another option that is also a better fit to your current needs. You will of course need to weigh up the cost versus benefit of switching lenders and/or loan products.

2. Have you just received a pay rise or bonus?
Adding a lump sum contribution to your home loan can help reduce both the interest owed and the term of your loan. Check to see whether your current home loan allows extra repayments. Keep in mind that if you have an offset account or redraw facility attached to your loan, you can still access the extra funds if needed.

3. Have you recently moved from a single income to a double income?
You might choose to use the second income to repay your home loan sooner and/or build up equity to upsize, buy an investment property, etc. Using an offset account could be a good option, particularly if you now have more income to add to the account, which would reduce the overall interest charged on the loan. If your current home loan doesn’t have an offset account facility, you might want to review those that do.

4. Do you have plans to upsize or downsize?
If you are looking to move to a different dwelling to suit changing needs, there are several options available. Whether you are looking to upsize or downsize, a check-up will allow you to determine whether your current loan is still suitable or whether there is a better option available for you. In either case, a mortgage broker can help you assess your options.

Online calculators and comparison websites are a helpful starting point when assessing the suitability of a home loan, but it’s also handy to consult with a professional mortgage broker, who can factor in the individual circumstances to tailor the loan comparison. They also step you through the loan selection, application, settlement process and more, which could save you time, stress and potentially money.