It’s easy to become comfortable with your home loan, especially when you’ve had the same one for many years. While this can be a good sign to show that you’re happy with the loan you have, it could also mean you’re missing out on savings.
As life becomes busier, you might not think to review your interest rate and the features that come with your loan. Looking over your home loan every so often – particularly when the official cash rate moves – could give you the chance to save some money in the long-run.
Now is a great time to get out the fine-toothed comb and run it over your home loan.
Interest rates are still at a record low and with the Reserve Bank lowering the cash rate twice this year, many lenders are passing on cuts which naturally leads to more savings for both buyers and homeowners.
Current homeowners can take advantage of the lower rates through refinancing, meaning that you can take the opportunity to restructure your home loan to suit your current needs.
For example, you could tie your mortgage down to a fixed interest rate over a three or five year period. This is a great option if you’re looking for a bit of consistency when it comes to loan repayments.
When interest rates are lower, you can look at paying off more than the minimum monthly repayment and put a serious dent in the balance of your loan, leading to saving on interest down the track and owning your home sooner.
While you’re giving your finances a refresher, you might want to take the opportunity to go through the features that your loan has to offer. If you choose to switch your home loan to another type, then there are likely going to be features that have been added onto it. Saving money on your home loan is about more than just low interest rates.
To pay off your loan faster, your mortgage broker can often negotiate some of the features that you won’t use and have them removed from your loan. If, for instance, you don’t think you will use repayment holidays or offset accounts, then why pay for them?