A new financial year is a good time to give your home loan a health check.
The mortgage market never stands still – and neither do our lives, so it makes sense to give your home loan a health check at least annually. It’s a simple way of knowing whether your mortgage is still meeting your needs.
Check the rate
Start by looking at the rate you’re paying. You can find this on your latest loan statement. If you’re currently on a variable rate, now could be the time to lock into record low interest rates by fixing all or part of your loan. Many fixed loans permit extra repayments without penalty fees (within annual limits) though access to features like redraw may be limited.
Do repayments match your cashflow?
Next, consider whether the loan repayments- weekly, fortnightly or monthly, still suits your cash flow. If you’ve changed jobs, chances are the timing of your wage or salary payments is different. You may want to adjust your loan to suit this.
Are the features what you want?
Take a look at the features your loan offers. Maybe you weren’t in a position to make extra repayments when you first took out the loan but that may have changed and features like redraw could now be important to you. That makes it time to check the accessibility and fees of your loan’s redraw facility.
Offset makes sense if you have savings
If you’ve built a pool of savings it can be a lot more effective to hold spare cash in an offset account. Instead of receiving separate (and fully taxable) interest payments, the balance of your offset account is deducted from the loan when interest is calculated. It’s a smart way to put savings to work paying off your mortgage sooner while still having access to the cash.
Taking a few minutes today to give your loan an annual review gives you peace of mind for the year ahead. Talk to your Aussie broker about a free home loan health check.