Are you paying too much for your home loan?
When was the last time you reviewed your mortgage?
We sometimes fall into the trap of set and forget. Much like your phone plan you need to review your home loan to make sure it is performing at its best for you. Remember when 1GB of data was a lot?
There are some key considerations you should be looking at. It may be that refinancing your mortgage will be advantageous for you, or after review you may find you do have the best home loan for your needs.
Is your interest rate too high?
Interest rates are not the single determinant factor when it comes to whether your loan is best suited to you, but as it is most people’s major household expense it is very important to stay on top of the market and have your loan professionally reviewed regularly.
Interest rates are at 50 year historic lows. If you are paying more than 4% for an owner occupied home loan then you are probably paying too much. Do you actually know your current interest rate? Did you know that interest rates can be as low as 3.74%?
Is your credit rating now better?
You life and your finances are constantly evolving and your credit rating now may be way better than it was when you originally took out your home loan.
Why is this important? When you originally applied for your mortgage you may have had a lower credit rating and been seen as a higher risk to your lender. There are quite a few factors that can influence your credit score, but if your finances have improved over time then in all likelihood your credit score has.
If you have a better credit rating now, then you may be able to achieve a better deal on your home loan.
Has your income increased?
Similarly to your credit score your disposable income may well have increased. It may be that you can now adjust your payments to shorten the length of your loan reducing the total interest you are paying over time. Can you pay more and shorten the length of your loan?
Has your introductory rate changed?
Many home loans have an introductory rate that expires over time and moves you to a higher rate. Has this happened to you? Are you now paying over the odds for your interest simply because your introductory rate has expired.