Mortgage tips to help borrowers own their property sooner
While interest rates and living costs are rising, the possibility of borrowers improving their mortgage situation via a few key steps is an opportunity not to be overlooked.
To help borrowers take a few steps closer to being mortgage-free, Mortgage Choice suggests going over the following checklist:
Step 1: Is your current mortgage still the most suitable for you?
Circumstances change, as do your needs. Consider how competitive your lender’s interest rate is, what features you are paying for and aren’t using, the fees you’re forking out for and what kind of costs are associated with switching loans and/or lender. A reputable mortgage broker can offer a no-cost home loan health check to compare your loan to others currently available.
Step 2: Are there ways to pay off your mortgage quicker?
Have you been throwing money into the home loan account wherever possible e.g. your yearly tax return or bonus or leftover monthly wage? Every cent counts. Is it possible for you to repay at a faster rate via other methods e.g. paying fortnightly instead of monthly or making the loan a partial offset?
Step 3: Are you interest rate savvy?
Have you been repaying your mortgage as though its interest rate was at least two percentage points higher, preparing yourself for rate rises and in the meantime reducing your loan term and the amount owed? This will encourage a good savings habit and make adjusting to rate rises less burdensome.
Step 4: Is refinancing an option?
If you are struggling with your repayments, consider refinancing the home loan over a longer term than you have left. Or, if you’ve been making extra repayments to reduce your home loan amount, you could always refinance the home loan so your repayments reflect what you owe on the loan, not the original home loan amount.
Step 5: Have you looked at your spending habits?
Are you spending more money than you need to e.g. transport, entertainment, fast food? Continually list your expenses to see where you can save money and contribute more into your mortgage. Once you have revisited all of the above steps, re-do your budget so you really are beginning the year ahead.