Customers often ask me what a Home Loan Health Check is, and I tell them it’s the single most important thing you can do to ensure you’re getting the most out of your finances as they relate to your property value and the housing market.
Just as property market changes, so do your personal circumstances. So while your home loan may have been the best one, five or 10 years ago, it might not be now. Spending a small amount of time reviewing your home loan can reap rewards, including:
- Secure you a lower interest rate
- Save you money over the term of your loan
- Reduce your repayments
- Consolidate your debt
- Give you flexibility to adapt to life’s changes
Before reviewing your home loan there are things you should consider doing:
1. Identify your goals
To understand if your home loan’s able to support your current and future financial and personal situation, you need to be sure of what your goals are. You could consider the following questions:
- Do you want to pay off your home loan faster?
- Are you planning to grow your family and therefore need to reduce your repayments?
- Do you want to expand your property portfolio with investments?
- How much is your house worth?
- Do you want to unlock equity in your home?
- Would you like to renovate?
- Are you hoping to move to a bigger home or a nicer area, or both?
Thinking about your goals will help you work out whether your current home loan has the flexibility and features to enable you to achieve them. I recommend home owners review their goals annually, so you know whether your needs have, or will, change.
2. Consider your options and costs
Beware of changing your home loan for change itself. You have to weigh up the cost of refinancing with the amount of money saved over the term of the mortgage.
Online home loan calculators can help you with this. And if you want personalised results, your local Aussie broker can provide more specific information combined with their specialist knowledge and housing market predictions.
Fees or charges to watch out for include:
- Discharge and resetting costs
- Application fees
- Exit or break fees
- Lenders Mortgage Insurance if you’re borrowing more than 80% of the property’s value
- Charges for loan features such as redraw, branch and interest access
If you’re largely happy with your loan and you just want a better interest rate, simply ask your current lender. They like to keep good customers, and you may be surprised at what they’ll offer.
Quick tip – buyer beware
But remember, your lender can also do a health check compared to their other loans, but they won’t tell you if another bank or lender has a better deal. (Click to tweet)
Mortgage brokers have access to multiple lenders and loans and can compare these for you in minutes to recommend one more suited to you. It’s becoming increasingly common in today’s competitive mortgage and property market, and on average, homeowners change their loan every five years.
It’s becoming increasingly common in today’s competitive mortgage and property market, and on average, homeowners change their loan every five years.
How Home Loan Health Checks work
A Home Loan Health Check won’t cost you anything and is obligation-free, so what do you have to lose?
At Aussie, we send you a short form to complete so we have the facts, and we’ll then meet with you to discuss your goals, review them against your current loan and look at if there are other loans better for your circumstances, property valuation and future plans.
All you need to bring are current payslips, home loan statements and rates notices, though more documents would be needed if you decide to refinance, such as property appraisal.
If you’re still unsure whether you should review your home loan, download this “Home Loan Health Check” checklist. If you answer yes to one or more of the questions, it’s time to check the health of your home loan. It’s one hour of your time that could save you thousands.
Over to you – have you ever done a Home Loan Health Check? Tell us about your experience.
If you found this article useful please share it using the buttons below.