February 10, 2015
With Valentine's Day just around the corner, many Australians will take the time to review their relationships and make sure they are with the right person.
“But while many of us will actively review our relationships on a regular basis and make sure we are not settling for second best, we don't take the same proactive approach towards our finances, in particular our mortgages,” Mortgage Choice spokesperson Jessica Darnbrough said.
According to Mortgage Choice's recent Happy As Index, less than 50 per cent of those with a mortgage plan to review their home loan this year.
“Given that many of Australia's lenders have recently cut their rates to 60 year lows, now really is the perfect time for those with a mortgage to review their situation and make sure they are still in the right product for their needs,” Ms Darnbrough said.
“After the Reserve Bank announced it would cut the official cash rate by 25 basis points last week, many of Australia's largest lenders were quick to follow suit, trimming 0.25 per cent from their respective standard variable rates. But while many were happy to pass on the full rate cut, some lenders went even further, trimming more than 25 basis points from their standard variable rates. This act shows just how hungry Australia's lenders are for business.
“With that in mind, it makes sense for borrowers, especially those who have been in the same mortgage for the past few years, to review their home loan.”
Ms Darnbrough said Australians who review their mortgage may not only find that there is a better product for their needs, but they may find they are able to save themselves thousands of dollars in mortgage repayments over the life of their loan.
“Say for example, you currently have a $300,000, 30-year mortgage with an interest rate of 5%, if you were to review your mortgage and ultimately shave 25 basis points from your interest rate, you could save yourself over $16,000 in interest over the life of your loan,” she said.
Before you attempt to refinance your mortgage, Ms Darnbrough said it is important for mortgage holders to do their due diligence and research what options are available to them.
“Many of Australia's lenders are offering significant discounts at the moment, so it is important for borrowers not to take a lender's standard variable rate on face value as it is possible to secure a much lower rate,” she said.
“A mortgage broker can step you through the process and scan through hundreds of home loan products to help you source a sharply priced mortgage that is right for your needs. In addition, they will do all of the paper work on your behalf, often at no cost to you. “
If you would like learn more about your home loan or financial advice options, call 13 77 62.