The importance of reviewing your mortgage.

Reviewing your mortgage is not only just about getting shiny new low-interest rates and a cash incentive.  While the overall deal negotiated is important, it is also about making sure that the bank your home loan is with, is still the best bank for you.  That the loan products and benefits of those products are best suited to you, and the overall structure of your home loan is still relevant to your financial position.

Often being with the right bank that has the right products for you, can save far more money than just taking a new low-interest rate; and that money saved is far better off in your pocket than the banks.

Banks are not the same

Most people will take up their home loan when they purchase their first home and any advice provided at that time on which bank to go with, or how to structure the home loan will be largely based on the borrowers’ circumstances at that point in time.

Often a borrower will be limited to only one bank or have very limited options to choose from when they purchase their first home.  This is usually due to having less than a 20% deposit at the time of purchasing their home.

Not all banks or lenders have every loan product in the market, and there are often times where you could save a significant amount of money by restructuring the mortgage with your current bank; or if your bank does not have the best product that suits your position, refinancing to a new bank.

How much does a home loan review cost?

At Connect Me Mortgages, having a review completed is 100% free.  We will provide you with independent advice that keeps your best interests at the forefront of our recommendations.  And, when dealing with the major trading banks and smaller banks, our services to implement your recommended plan will also be 100% free of charge.

What happens at review time?

When reviewing your mortgage, your Connect Me Mortgages Adviser will discuss your current financial position and ask about your future goals.  It is important to consider your future goals, because it may impact how your Adviser would recommend how the loan is to be structured.

An example would be, if you had a goal to start a family in the next 12 months, you may want to work towards having a contingency fund either within the home loan or through external savings to cover any shortfall of income when you drop to one income for a period of time.  In this same example, taking a 1-year fixed term may not be as suitable for you, as a 2 years plus fixed term.  Given that you may want some stability in your budget throughout this period until you have a chance to decide if you will return to two incomes or not.

Cost vs Benefit

By reviewing your mortgage, your Connect Me Mortgages Adviser can also show you ways that you can repay your loan faster, without necessarily compromising your lifestyle or spending habits.  This usually will come down to restructuring your loan.

An example of this would be for us to consider break fees; to break a higher interest rate fixed loan to refix at a lower rate, and then set the repayments at the same amount you were making prior on the higher rate.  There is a cost vs. benefit calculation for this that your Connect Me Mortgages Adviser can work through with you.  Often it may be that we will restructure part of your lending onto a product that can reduce the daily interest the bank is calculating on your home loan by making the best use of your income running through your accounts, or any savings funds held.

Another example would be if you have short-term debts such as credit card debt, high-interest personal loans, or vehicle loans, it can be a good opportunity to consolidate these debts onto the home loan on a much lower interest rate, as a separate loan portion.  If you set the repayments on the debt consolidation loan portion to be the same as what the combined short-term debt repayments were, you will fast-track this debt to be repaid sooner.

How do I know I need a home loan review?

If you have not had your mortgage reviewed within the last 12 months, then it would be recommended to do so.  Some triggers would warrant having a review to be completed, regardless of when it was last reviewed.  Some of these triggers are:

• A change in income – through a change of jobs, resulting in a pay increase/decrease.
• Change of employment type – if you are switching to become a contractor or start up a business, becoming self-employed (note it is highly recommended that you speak to your Connect Me Mortgages Adviser before making the change so we can provide advice and implement your structure prior).
• Change in your relationship status – such as marriage, divorce, or a new relationship.
• Change in your family situation – additions to your family by way of children or other dependents.
• Change in debt levels – such as taking on personal loans or credit cards.
• Change in property ownership – if you plan on buying more property or selling a property within the next 12 months.

If you have not had your mortgage reviewed within the last 12 months, have had one of the triggers above occur, or would like to know if you have the best home loan structure that best suits you and will make the best use of your money; then contact a Connect Me Mortgages Adviser for a free review by filling in the quick form below, or apply online.

The information contained in this blog is not tailored mortgage advice; please contact a Connect Me Mortgages Adviser to get tailored mortgage advice for your own financial position.